Oral Answers to Questions

HOME DEPARTMENT

The Secretary of State was asked—

Police Custody Cells (Dorset)

Tobias Ellwood: How many police custody cells there are in police stations and courts in the Dorset area; and if he will make a statement.

Paul Goggins: There are currently 58 police cells and detention rooms available in Dorset. The number of police cells is an operational matter for the chief constable and the police authority.Cells in the courts are under the ownership of Her Majesty's Courts Service and are not a police facility.

Tobias Ellwood: The number of arrests in Bournemouth on a Friday or Saturday night has increased, and by midnight Bournemouth police cells are full, which means that people arrested after that must be taken to other parts of Dorset. Will the Minister look into why the 16 serviceable cells that are part of the law courts are unavailable for the police to use?

Paul Goggins: May I begin by congratulating the police in Bournemouth on dealing so effectively with people who break the law, by arresting them in greater numbers? I understand that there are quite ambitious plans to improve the number and the quality of police cells in Bournemouth through a scheme that is being worked up. As I understand it, across the whole police force, 83 police cells will eventually be available. The police have to make an assessment about the facilities that they can afford and that are needed at any particular time, but with plans for more cells to be available and the kind of activity the hon. Gentleman outlined with regard to arresting offenders, his police force seems to be going in entirely the right direction.

Probation Service

Neil Gerrard: If he will make a statement on progress with the planned changes to the structure and role of the probation service.

Fiona Mactaggart: We are preparing legislation to restructure the probation service, which we will bring forward as soon as parliamentary time allows.

Neil Gerrard: In the consultation on the proposals, four out of 749 responses were in favour of the restructuring proposed. Is it not a fact that most people were in favour of many of the other proposals in that consultation document to do with the need for partnership working, inter-agency working and so on? Would it not be better to concentrate on the aspects that have support than on the issue of contestability, which will end up with staff in the probation service not supporting what we are trying to do?

Fiona Mactaggart: The hon. Gentleman is right that many of the proposals had widespread support. In particular, the concept of end-to-end offender management is almost universally supported as one of the tools that we need in order more effectively to protect the public. We will shortly publish the full report on the responses and Members will then see how we are taking forward the issues that we have identified. However, I have to say to the hon. Member—[Hon. Members: "Friend."] I thank hon. Members for the kind reminder. I have to say to my hon. Friend that we remain of the view that ensuring that the services delivered meet the identified needs, which is one of the key issues in contestability, will more effectively deliver probation services.

Edward Garnier: The Minister knows that hardly a week goes by without another terrible crime being committed by someone released early from prison. Why does not the Minister provide the probation service and the National Offender Management Service with real political leadership and effective and strategic management? We do not need more legislation. We need the Minister to lead that increasingly demoralised service from the front. When will she get on with that?

Fiona Mactaggart: The hon. and learned Gentleman is right to point out the shocking cases where we have failed to protect the public properly, and he is right to say that it is necessary for the ministerial team to lead the service from the front. That is why my right hon. Friend the Home Secretary commissioned Her Majesty's chief inspector of probation to produce a report following the tragic incident in which Messrs. Hanson and White were responsible for the murder of John Monckton. We have committed ourselves to implementing in full all the recommendations of Her Majesty's chief inspector, and we will make another report to the House about further action that we will take to improve public protection.

David Taylor: Is it not the case that the proposals that the Government are considering were taken wholesale out of the Carter report, and that without any consultation, debate or testing, they plan to implement them without reservation? Is that not a fragile base for major restructuring, and does it not sound the death knell of a publicly accountable probation service in its 100th year?

Fiona Mactaggart: I do not quite understand what my hon. Friend is claiming, because he will have heard his hon. Friend the Member for Walthamstow (Mr. Gerrard) speak earlier about our having received more than 700 responses to our consultation and the fact that we will shortly publish that. A claim that we are ramming through reforms willy-nilly without public consultation on them is frankly not well founded.
	I suggest that my hon. Friend awaits publication of the results of the consultation, which will give a clearer direction on how we plan to implement the proposals, and also the forthcoming publication of the contestability prospectus, which will show how we intend to roll out change so that we can ensure that we get the best of being able to offer these services to public contest and not merely decide that we know all the answers before we put them into practice.

Police Restructuring

Mark Francois: What representations he has received on the proposed merger of the Essex police with neighbouring forces; and if he will make a statement.

Charles Clarke: The Home Office received a business case from Essex police force and police authority in December, as well as a large number of other submissions, including, recently, a letter from a number of Members of Parliament, including the hon. Gentleman, to which I shall reply today. Since then, Home Office officials, together with experts, have been assessing the various options outlined in that business case to determine which are operationally and financially the most viable.
	Those assessments are now complete, and based on them, I announced earlier today by way of written ministerial statement that I am minded to merge Essex with Hertfordshire and Bedfordshire to form a strategic force. I am meeting representatives today from those forces and authorities to consider taking forward the option for police that will in my opinion be of greatest benefit to their communities. I will invite the police authorities concerned to respond by 7 April and will then make a final decision on how to proceed in these areas. Clearly, we will continue to have discussions with all key stakeholders, including Members of this House.

Mark Francois: There will be both anger and dismay in Essex at today's announcement, not least as it transpires that both Kent and Hampshire are being allowed to stand alone, but apparently not us. Can the Home Secretary confirm that the police authorities of Bedfordshire, Hertfordshire and Essex have offered him a voluntary merger on a Beds and Herts and Essex stand-alone basis? Why did he reject that voluntary offer, which was put to him directly by the police authorities themselves?

Charles Clarke: As I said, I will discuss later today with representatives of the police authorities and the forces the options for the region. In particular, the reason why we decided on advice from Her Majesty's inspectorate of constabulary not to go along the line of the Beds-Herts voluntary merger, along the lines the hon. Gentleman suggests, is that its professional assessment is that such a force would not have the capacity to deal with the protective services level that is necessary to protect their people, and by extension, people of the wider region, including those in Essex.

Andrew MacKinlay: As the only Labour Back Bencher in Essex, may I say to the Home Secretary that I hope he will think again and acknowledge that there is still an opportunity for me and others to persuade him? The inspectorate would not have taken into account wider Government policy on the Thames Gateway. As a Back Bencher, I am sick and tired of trying to support the ODPM's policy for a Thames Gateway, only to see other Departments go in the opposite direction. I have had enough. I think it is time we had a coherent policy from this Government, so that they sing from the same song sheet as they expect me to do. I think it is time we had one Essex—

Mr. Deputy Speaker: Order. I think the hon. Gentleman was as well to quit when he was ahead.

Charles Clarke: I shall certainly try to keep going, even if I am not ahead.
	The fact is that we made it clear from the outset that our strong preference was to respect Government offices for the regions boundaries in the reorganisation that we did. I say to my hon. Friend that that was one consideration about looking at the Thames Gateway approach, as he advocated. I can give him the confirmation that he wants. We are now in the process of going down a line that could take up to four and bit months for people to make their representations about the proposals that we have. I have no doubt that representations will be made; he has just indicated that he will be among those making representations. Of course, I shall take those representations seriously before coming to the final decision and laying an order before the House.

Simon Burns: Many people find it difficult to believe that the Home Secretary will take representations fully into account, because they regard his decision today as completely ignoring the numerous representations against the proposals that his Department has already received. Will the Home Secretary give me a categorical answer to this narrow question: if Essex were to have a properly run referendum on whether it should remain as a stand-alone authority or whether it should be merged, and there were an emphatic vote for a stand-alone police force, would the Home Secretary be prepared to accept the verdict of the people of Essex?

Charles Clarke: I can give the hon. Gentleman a categorical answer, which is no. It is my duty to consider policing protection for the whole of the country—for Bedfordshire and for Hertfordshire as well as for Essex—and that is the basis on which I will examine all the proposals. That is the basis on which I considered the Essex situation, and it is the basis on which I consider all the situations. I assure the hon. Gentleman that whatever views are expressed, I shall take them seriously, but when I consider the policing of the country, I will not be bound by a proposal to hold a referendum in a particular force area that does not look at the wider needs of the whole community.

Bob Russell: Will the Home Secretary explain the logic by which Kent on one side of the Thames should remain as a single force while Essex on the other side should be amalgamated with Bedfordshire and Hertfordshire, when there is no logical community of interest between, for example, Colchester and Leighton Buzzard? If the case for Essex is as good as that of Kent, why is Kent being left as a stand-alone force while Essex is not?

Charles Clarke: I can explain the logic, which I am sorry that the hon. Gentleman has not grasped. In the south-eastern region, in which Kent is located, there is one set of relationships between forces and their capacity to deal with protective security, and there is another set of relationships in the eastern region. The decision did not involve a comparison between Essex, Kent, Hampshire or any other force; it involved looking at the overall protective security requirement for policing in each Government office region, which is the appropriate and correct stance for us to take.

Nick Herbert: Just more than a year ago, a joint Home Office-strategy unit report warned that
	"Evidence from other sectors suggests that merger can be a costly, protracted exercise which does not always deliver expected benefits and inevitably causes distraction for management and staff".
	Why has the Home Secretary ignored the warning in his own report?

Charles Clarke: I am sure that the hon. Gentleman will be surprised to hear that I regard the considered view on policing of Her Majesty's inspectorate of constabulary as carrying greater weight than that of the Prime Minister's delivery unit, however expert it may be. [Interruption.] I am sorry, but that is my duty as Home Secretary. By the way, the Prime Minister's delivery unit would not claim to conduct a rigorous assessment of policing in the same way as Her Majesty's inspectorate of constabulary. My job—as I have done it—is to ask Her Majesty's inspectorate of constabulary to make its assertions, which is what it has done and which is where we stand.

Neighbourhood Policing

Iain Wright: If he will make a statement on the neighbourhood policing pilot schemes.

Hazel Blears: All 43 neighbourhood policing basic command unit pathfinders—there is one in every force—are making good progress in developing and implementing locally specific models for neighbourhood policing, and they are supported by an Association of Chief Police Officers-led neighbourhood policing programme team.

Iain Wright: Next Thursday, I shall launch the neighbourhood policing pilot model in Hartlepool. [Hon. Members: "Hear, hear."] Thank you. As part of that pilot, we will get an additional 36 police officers, which will help to reassure the people of Hartlepool. In order to maximise such reassurance, however, the public need to be confident that they can get hold of those additional officers. What steps will my right hon. Friend take to ensure that the punters on my patch can get hold of local police teams?

Hazel Blears: My hon. Friend has a long, consistent and proud record of campaigning on crime, disorder and antisocial behaviour in his constituency. I know that he will be delighted that his area is one of the pathfinders for the programme and understand that 15 ward-based teams and three support teams will be in place by 3 April. All the details of the dedicated neighbourhood officers will be publicised in advance, so the public will know who those officers are, how to contact them and how to have their say on local priorities in Hartlepool.

Derek Conway: The Minister will understand why those of us with a suspicious mind think that this roll-out may have something to do with the elections on 4 May. The trial schemes that we have had in Bexley from the Metropolitan police are very welcome, but we need the assurance that these are not notional jobs and that real policemen are to be allocated to these schemes, which are then left in place. In practice, we have seen that they are sometimes taken away and so become somewhat fictitious.

Hazel Blears: I had the pleasure of visiting Bexley just a week or so ago. I assure the hon. Gentleman that that is no coincidence in terms of the local elections. In the past few weeks I have also been to Barnet and to Hackney to see the safer neighbourhood teams. There are now 285 safer neighbourhood teams across London, and there will be teams in every ward by the end of April. I can tell the hon. Gentleman that they comprise real, substantial police officers and that they form part of the extra 14,000 police officers whom the Government have introduced, together with the extra 6,000 community support officers whom we have introduced and funded.

Kerry McCarthy: I very much welcome the fact that in my constituency a neighbourhood policing pilot area is due to start shortly, and I welcome the extra police officers and police community support officers whom we will get as part of that. Is the Minister aware, however, that people from ethnic minority communities who have worked for the local council as neighbourhood wardens are proving reluctant to move over to become police authority employees as PCSOs, and does she have any plans to address that issue?

Hazel Blears: I am delighted that so many Members are now experiencing the benefits of neighbourhood policing. The particular issue that my hon. Friend mentions has not been raised with me, but I will certainly look into it. I am delighted not only that many of our PCSOs are members of a variety of ethnic minority communities, but that a much higher proportion of them are women than is the case among police officers. PCSOs therefore represent a good way in which to get extra diversity into our police service.

Angela Watkinson: The Metropolitan police has announced that in order to complete its safer neighbourhood team project and have a community police team in every ward this year, it will be necessary to transfer a significant number of officers from serious crime squads in the capital. These are both important priorities. Does not the Minister agree that instead of robbing Peter to pay Paul, it would be better to cut bureaucracy and paperwork?

Hazel Blears: I think that the hon. Lady will acknowledge that the safer neighbourhood teams comprise additional officers and additional police community support officers and that they are extra resources for the people of London to ensure that they have very good, dedicated local neighbourhood policing. Clearly, serious crime must also be dealt with, and I have no doubt that the Metropolitan police is doing just that. In terms of tackling bureaucracy, the hon. Lady will know that we have not only abolished awhole series of forms but introduced video identification, which is saving police officers thousands of hours of officer time. The introduction of fixed penalty notices has also saved a huge amount of officer time and led to much more effective policing.

Kurdish Asylum Seekers

Si�n James: What UK immigration policy is on returning failed Kurdish asylum seekers to Turkey.

Tony McNulty: The UK immigration policy on returning asylum seekers to Turkey is the same as elsewhere. All failed asylum seekers from Turkey who have exhausted their appeal rights are expected to leave the UK. If they do not, we consider it entirely reasonable for us to enforce the return of that individual where it is safe to do so.

Si�n James: I thank my hon. Friend. I have given him advance notice of my question about the case of Mrs. Ayse Siringul. Mrs. Siringul is a Kurdish asylum seeker from Turkey who has suffered severe abuse in that country and very poor treatment here in Britain. She is making a valuable contribution to her local community in Swansea, East, and I would be extremely concerned about her and her children's welfare should they have to return to Turkey. I should be grateful if my hon. Friend would look again at this case.

Tony McNulty: I thank my hon. Friend for giving me notice of the case. She will know that I am unable to discuss the specific case of an individual at the Dispatch Box. However, I am aware of the background and I will write to my hon. Friend in due course about the points that she raises.

Nicholas Clegg: In view of the Government's intention to reintroduce the obligatory use of vouchers for failed asylum seekers, can the Minister clarify what has happened since April 2002, when the use of those vouchers was scrapped by the then Home Secretary, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), who described them as
	too slow, vulnerable to fraud, and felt to be unfair by asylum seekers and local communities?[Official Report, 29 October 2001; Vol. 373, c. 627.]

Tony McNulty: As ever, the hon. Gentleman, who speaks for the Liberal Democrats, is wrong. He should read things other than The Guardian and get a life. We are not reintroducing vouchers. From April 2005, when section 4a prelude to removal from the countrysupport was introduced, it came with vouchers. The amendment that the House of Lords passed and that we will discuss when we consider the Immigration, Asylum and Nationality Bill would provide for far more flexibility than simply granting vouchers for food and accommodation. It would expand provision to support in kind and for goods and services, which is more than sufficient for the extremely limited group of failed asylum seekers who are on section 4 support. The hon. Gentleman should not talk about the reintroduction of things when he clearly does not know what was introduced in the first place.

Rob Marris: I urge my hon. Friend to be careful about returning asylum seekers to the Kurdish part of Turkey, given that the Turkish Government have a long way to go on human rights, especially for Kurds, and because of the concerns that Amnesty International, among others, has raised about article 301 of the penal code and the restrictions that that places on peaceable democratic dissent in Turkey, especially from the Kurdish community. Will he assure me that he will reconsider the position of the Kurdish community in Turkey given the human rights situation?

Tony McNulty: I thank my hon. Friend for returning us to the questionthat was kind of him. On a country-by-country basis, we always keep our information about minorities under review. In the context of the 1951 convention, the individual circumstances and history of each case are paramount in determining not only the asylum claim but whether, if the claim fails, it is appropriate to return individuals to their country of origin.

Julian Brazier: Does the Minister accept that there is some inconsistency in our considering asylum cases and sometimes granting asylum to Kurdish and other Turkish citizens while supporting Turkish accession to the European Union? How, in principle, could a common arrest warrant apply if Turkey was a member of the EU?

Tony McNulty: Unusually, the hon. Gentleman confuses six different aspects of Government policy. I hope that he takes a generous view of all six.

Voluntary/Community Organisations

Jim Sheridan: What steps he is taking to support the work of voluntary and community organisations.

Paul Goggins: Government support for the voluntary and community sector is at record levels. We will continue to work closely with the sector in promoting a wide range of activity, including volunteering, civil renewal and public service delivery.

Jim Sheridan: I am sure that my hon. Friend acknowledges the good work of all our voluntary organisations in our communities. Perhaps one way to encourage them is through accommodating volunteers in the honours system. Will he consider early-day motion 1324, in my name, which unfortunately has little support from the Opposition parties? It encourages the recognition of volunteers in organisations and communities by the honours system.

Paul Goggins: As an assiduous reader of early-day motions, I have had the opportunity of reading early- day motion 1324. I appreciate that it reflects a strong view that people in, for example, sport, have already had their reward financially and through fame, and that the genuine heroes are the army of volunteers who work in my hon. Friend's community and those of all hon. Members. The answer is that both categories deserve recognition. I am delighted that, nowadays, half those   who receive public honours do so on the recommendation of ordinary members of the public. That is welcome. However, people who volunteer do not do that for the reward but for the difference that they make.

Andrew Turner: I agree with the Under-Secretary's last comment. The Public Accounts Committee report criticised the yearly bidding round for grants as wasting the time of staff in both the Department and voluntary organisations in putting together applications. The bidding round was also criticised on the ground that the annual uncertainty led to voluntary organisations losing staff. The report concluded:
	The Home Office has a lead role in promoting good practice in engaging with the voluntary sector and yet some 72 per cent. of its own funding contracts are for less than one year.
	Why?

Paul Goggins: The Public Accounts Committee is right to say that the Home Office has a lead role in supporting and encouraging the voluntary and community sector. I also agree with its recommendation that we all need to think more long-term about the grants that we give to support voluntary organisations. Sometimes, grants are given for specific time-limited projects, but it is still important that we should think long-term. That is why we are introducing the compact, and the compact commissioner, who will oversee the relationship between public funders and voluntary organisations. That will provide the long-term sustainability that the hon. Gentleman seeks.

Identity Cards

John Barrett: What discussions he has had with the First Minister of Scotland on the introduction of identity cards.

Andy Burnham: My right hon. Friend the Home Secretary meets his colleague the First Minister regularly to discuss a range of issues, including identity cards. It has always been for the Scottish Executive and Parliament to decide whether ID cards should be used for accessing devolved public services, and the First Minister and my right hon. Friend are entirely in agreement on that.

John Barrett: The Minister will be aware that the devolved Executive have stated clearly that they do not wish to use identity cards for access to devolved services. Will further meetings be arranged to find out the true feeling of the Scottish Executive and of the Scottish people, who would prefer to spend their money not on this expensive scheme but on additional police and security services? Will the Government accept the will of the public and of the majority of Members in this House, who believe that the ID card scheme is fatally flawed?

Andy Burnham: As the hon. Gentleman knows, the Home Office is always assiduous in its research. In answering his question, I can go the extra mile and be even more authoritative, because I visited the Gyle shopping centre in his constituency on 14 September with the biometrics roadshow. If he will permit me, I will read the first three entries in the public comments book from that day.
	Good demonstration, and it worked.
	Great idea. Wonderful demonstration.
	It is good to see new technology being utilised for something that is so useful to our society.
	I am sure that the hon. Gentleman speaks for his constituents with authority, but I, too, have consulted them, and there is strong support among them for our proposals.

Violent Crime

Stewart Jackson: What assessment he has made of the trends in the level of violent crime recorded by the police over the last five years for which figures are available.

Hazel Blears: Total violent crime recorded by police in England and Wales rose from 703,000 in 19992000 to 1,185,000 in 200405. However, the introduction in April 2002 of the national crime recording standards and of more proactive policing practices has had the effect of increasing recorded violent crime. The British crime survey, which gives a better indication of trends over time because it has measured crime in a consistent way, shows a fall in violent crime of 30 per cent. between 1999 and 200405.

Stewart Jackson: Two months ago, the Prime Minister said:
	Crime figures are the measure of whether this Government is succeeding or failing.
	Violent crime has risen by 96 per cent. since 1998, and there are now more than 1 million violent crimes committed each year. When will the Government tackle this problem effectively instead of relying on short-term political gimmicks and wasting millions of pounds of taxpayers' money on unwanted police mergers?

Hazel Blears: I thought that I had made it clear that the British crime survey found that violent crime had come down by 30 per cent. The British crime survey has been going for 25 years, so it is not a short-term gimmick. Operation Eagle ran in the hon. Gentleman's own constituency recently as part of the alcohol enforcement campaign. This involved a dedicated team of officers focusing on violent crime and drunk and disorderly behaviour in order to make Peterborough a safer place for people to live in by tackling those problems. Does he regard that as a short-term gimmick, or does he welcome the fact that dedicated, focused policing is reducing violent crime in this constituency?

Margaret Moran: Does my right hon. Friend agree that the increase in reported crime in Luton is actually a success story in regard to domestic violenceif there can be such a thing? Following the introduction of the domestic violence courts and the doubling of the number of police in the domestic violence units, victims are now confident to report violent crime and to see its perpetrators being caught. But is she aware of the growing concern, as evidenced in my casework, about victims of violence associated with forced marriage? Will she ensure that the police are trained to deal with that form of violent crime, as well as increase the training to combat domestic violence?

Hazel Blears: My hon. Friend has a proud record of campaigning on domestic violence and crimes against women in particular. I confirm that we take those issues extremely seriously and are currently involved in a campaign to highlight issues around forced marriages. It is fair to say that some police forces have more extensive experience of those issues than others, and I encourage them to share that good practice to make sure that the police are able to respond rigorously.

Robert Wilson: The Minister will be aware that four of the gang responsible for the murder of my constituent, Mary-Ann Leneghan, a 16-year-old, were under probation supervision at the time of the killing. In those circumstances, will the Home Secretary promise a full independent inquiry into what went wrong with the system and the supervision of those murderous young men?

Hazel Blears: Clearly, this is a matter of the utmost concern, not just to the families involved but to all of us. It is very important that we have a system that provides proper protection to the public. My right hon. Friend the Home Secretary will address that issue, together with others, in a statement to be made in the near future. It is important that we understand how to tackle them and make sure that people are protected. The hon. Gentleman has properly raised serious concerns, and the Department wants to make sure that it responds.

David Davis: When the Home Secretary initiated his Statistics Commission review of crime I had hoped that we would see an end to the Government burying their head in the sand about the increase in violent crime. The simple truth is that it is not a statistical artefact; our constituents witness it day in, day out in their towns and cities, and it is not a mirage. The doubling of gun crime is not a mirage. The increase in knife crime is not a mirage. The 35 per cent. increase in murder is not a mirage. When will the Minister recognise that violent crime is on the increase? Most importantly, will she tell the House what she thinks is the cause of that increase?

Hazel Blears: The right hon. Gentleman paints a picture that is simply not true in many respects. In relation to gun crime, he will know that the number of fatalities has decreased. He will also know that the Violent Crime Reduction Bill contains strong measures to tackle gun-related crime, including a ban on imitations, the use of which has increased. I hope that his party will support us in those measures. He will also be aware that we are introducing a nationwide knife amnesty, and, again, the Violent Crime Reduction Bill contains further powers to tackle knife crimes. In relation to the recent alcohol enforcement campaign, he will know that violence decreased by 11 per cent. in the areas taking part, due to good, early intervention, proactive policing and good tactics to tackle violent crime. The right hon. Gentleman does a disservice by painting a picture that is not a true reflection of the facts. We are constantly struggling to make sure that we tackle violent crime and make our streets safer.

David Davis: I have listened to the Minister give an incredibly selective set of statistics. Let me give her a single figure: the 35 per cent. increase in murder, leaving out the Dr. Shipman murders, since the Government have been in power. What she said does not answer that. The Government got elected on the phrase, Tough on the causes of crime. Two of the primary causes of violent crime in this country are drugs and alcohol, but this Government's policy on drugs and alcohol is out of control, which is why violent crime is spiralling out of control. What are they going to do about it?

Hazel Blears: Everyone in the House, and across society, will be concerned about homicides and murders, which are crimes of the utmost seriousness. As I am sure that the right hon. Gentleman would agree, we have one of the lowest murder rates compared with many other countries. We also have some of the toughest gun laws across the world. That is internationally acknowledged. I am also afraid to say that both he and his party predicted that we would see mayhem on our streets and an explosion of violent crime as a result of the liberalisation of the licensing laws, but the reverse has been the case. There has been an 11 per cent. reduction in violent crime, because thousands of young people are not spilling out on to the streets at the same time. We have well-managed town centres with good, effective policing, and I would like him to acknowledge that.

Hooliganism (World Cup)

Greg Hands: What assessment he has made of preparations to prevent football hooliganism by British fans at this summer's World cup.

Charles Clarke: I recently received a detailed assessment of the comprehensive multi-agency preparations that will be in place for the World cup. They will include an extensive policing operation at home and abroad, including the deployment of police officers and prosecutors in Germany. Co-operation with the host authorities is excellent, and I recently signed an agreement with Herr Schauble, the German Interior Minister, regarding UK-German governmental, police and judicial co-operation.
	A great deal has been achieved in recent years. Levels of English football disorder have fallen dramatically, and I am satisfied that everything possible is being done to prevent disorder in Germany.

Greg Hands: The Home Secretary says he is confident that everything possible is being done, but I fear that the Government are sleepwalking into disaster this summer. Does the Home Secretary agree that one of the most important steps that could be taken would be for the Germans to suspend the Schengen agreement temporarily, as happened during Euro 2004 in Portugal, so that fans going in and out of Germanywhether law-abiding or otherwisecould be subject to proper border controls?

Charles Clarke: That is a matter for the German Government. The Schengen agreement allows particular security provisions to be applied at national borders within the Schengen area, but, as I have said, that is a matter for German Ministers and not for me.

Ian Davidson: The question refers to hooliganism by British fans, but surely the reference should be to hooliganism by English fans, as everyone knows that Scottish fans are a perfect joy. [Interruption.] Let me tell those who are remarking that Scotland has not qualified that qualification for the World cup is now a devolved responsibility.
	Has the Minister been watching the Commonwealth games, at which the anthems of Scotland, England and Wales have been played? Has he noticed that none of those countries use God Save the Queen? That is because they distinguish between nationalities. Would it not be appropriate for England to have its own anthem?

Charles Clarke: I am grateful to my hon. Friend for allowing me to point out that I referred to English fans in my answer, although the question referred to British fans, because I was particularly sensitive to the point that he has made. I am well aware of the famous sporting achievements of Scottish sportspeople, for example in curling, and I hope that they will take place more widely.

Police Restructuring

David Jones: What recent discussions he has had with Welsh police authorities on proposals for restructuring police forces in Wales.

Tony McNulty: The Home Secretary has met the chief constables and chairs of all four police forces and authorities in the Welsh region. The purpose of those discussions has been to proceed with the option that will be the most effective in protecting the people of Wales, namely a single strategic force for Wales. We will continue to have discussions with all key stakeholders in Wales.

David Jones: As the Home Secretary has announced twice that he intends to proceed with the all-Wales option despite the opposition of the Welsh police authorities, what is the purpose of the consultation? Could anything possibly be said by the Welsh authorities that might change the Home Secretary's mind, or is this simply an exercise in window-dressing?

Tony McNulty: Not unusually, the hon. Gentleman's opening premise is entirely wrong. The Home Secretary's initial written ministerial statement triggered a four-month consultation, which is currently taking place. When it has ended, my right hon. Friend will present his view to the House.
	The consultation is serious, and all stakeholdersincluding the hon. Gentleman, perhaps on the right premise rather than otherwiseshould take part in it.

Mark Hoban: What recent representations he has received on his proposals to amalgamate police forces.

Hazel Blears: Unsurprisingly, the Home Secretary has received a substantial volume of letters and views from police forces and individual officers and staff, from police authorities and their members, from local government associations and members, and from members of the public. We continue to have discussions with all the key stakeholders.

Mark Hoban: I am grateful to the Home Secretary for listening to representations from Hampshire and I am glad that Hampshire will remain a stand-alone force, but will the Minister assure us that where mergers are forced through, there will be enough support for them to ensure that resources are still spent on front-line policing and not diverted to meeting the considerable set-up costs of the merged forces?

Hazel Blears: Even where forces stand alone, it will be absolutely vital for them to carry out a thorough assessment of their services to ensure not only that they can provide really good local neighbourhood policing, but that they can enhance their protective services capability, so that they can be certain that they can cope with increased threats from serious and organised crime, and can counter terrorism and ensure public order. We are absolutely determined that every strategic force in the country will be able do both those parts of policing extremely well and to the best of their ability. That is what the public expect.

Jim Cunningham: Can my right hon. Friend assure us that these amalgamations and mergers will lead to better police response times, particularly in Coventry and the rest of Warwickshire?

Hazel Blears: The police authority amalgamations are designed to ensure not only that we can cope with the threat from serious crime, but that local neighbourhood response is improved. We want to ensure that local neighbourhood police officers are not drawn away from the front line to deal with serious incidents. My hon. Friend may be aware that we are introducing national call-handling standards from November this year. That will be the first time that members of the public have had such standards, and they can expect the police to respond in timely manner to their concerns.

Patrick Cormack: Does the Home Secretary believe that he is infallible and, if not, why does he not listen to local people?

Hazel Blears: The Home Secretary is absolutely determined[Interruption.] I was not going to say that he is absolutely infallible; I doubt whether there is such an expression. He is a man of great wisdom and he will be assiduous in ensuring that he takes into account all the representations made to him. As the hon. Gentleman of course knows, when proposals are made they are subject to a four-month consultation period during which people can make representations. All such representations will be properly considered before final decisions are taken and orders are laid before this House.

David Kidney: Staffordshire is an early candidate for a merger with the west midlands regional forceprobably the second biggest in Englandjust as we are developing a county-wide community policing system. That system is very welcome, especially in rural areas, as I saw last Friday when I walked the beat with PC Ellie Sewell in Wheaton Aston. Can my right hon. Friend assure me that those large regional forces will not draw police officers away from very important community work in rural areas?

Hazel Blears: I can certainly give my hon. Friend that assurance, which is not merely warm words. We are putting 88 million into neighbourhood policing this year and 350 million next year, to make sure that we recruit the 24,000 community support officers who will form an integral and essential part of the neighbourhood policing teams. The amalgamation of forces will enable us to respond to serious crime and to ensure that the neighbourhood policing teams are not drawn away from the front line, which is exactly where the public in my hon. Friend's constituency want them to be.

Keith Simpson: In his statement today, the Home Secretary is proposing amalgamating the Norfolk constabulary with Cambridgeshire and Suffolk. That gives rise to a raft of questions, not least whether the new force is to be known as the North Anglia constabulary. When will the Home Secretary produce some firm proposals on, for example, political responsibility? When will we know the size of the police authorities and whether the figures will change? When will we know about resources and who is to be the chief constable? As yet, we have no information on those fundamental questions.

Hazel Blears: Those are perfectly proper questions and we will discuss those important issues, about which the public are also concerned, with the chairmen and the chief constables in the forthcoming period. I am pleased to say that Norfolk, Suffolk and Cambridgeshire have a history of collaboration, and I am sure that the amalgamation will work well. As we have pointed out, we want to ensure that every top-tier local authority has a place on the new strategic police authorities, and that there is a strong connection between the authorities' democratic element and their local communities. All those issues will be discussed and scrutinised properly as we take this matter forward.

Sudanese Asylum Seekers

Lynda Waltho: What steps he has taken to support those who have fled from atrocities in Darfur to the UK.

Tony McNulty: All applications for asylum, including those from Sudanese nationals from Darfur, are considered case by case. We will grant asylum or other forms of protection to those who are found to need it. As with all nationalities, Sudanese Darfuris applying for asylum in the UK are supported by the National Asylum Support Service for the duration of their asylum claim, where they meet the requirements for such support.

Lynda Waltho: I thank my hon. Friend for that answer, although I wonder whether the support may be too limited. Has he considered working with the Department of Health to provide or create a specialist health centre that could assist with assessing the physical and mental needs of survivors from Darfur and any future survivors of war crimes and crimes against humanity?

Tony McNulty: I take my hon. Friend's point extremely seriously, but we feel that, as and where such support is necessary, it is provided around the country via the national health service, rather than there being one central location.

Early Release (Risk Assessment)

Andrew MacKay: If he will make a statement on the risk assessment of offenders who are being considered for early release from custody.

Fiona Mactaggart: For prisoners who are eligible for release on parole or life licence, the Parole Board is required to conduct a thorough assessment of risk, considering reports prepared by the probation service and the Prison Service and other experts such as psychologists and psychiatrists. Its overriding duty is to protect the public.
	Prisoners who have been convicted of the most serious sexual or violent offences are deemed unsuitable for early release on the home detention curfew scheme. Those who are eligible are subject to a careful risk assessment, undertaken by the prison governor.

Andrew MacKay: I am sure that the Minister will agree that there have been too many horrendous cases recently involving people who have been released early from prison, which has caused the public to lose confidence. What are the Government going to do about that?

Fiona Mactaggart: The right hon. Gentleman is quite right to say that those cases have caused real concernrightly so. That highlights the importance of our delivering effectively on our duty to protect the public. We are using three key tools to improve the situation. First, there are the new sentences under the Criminal Justice Act 2003, which includes extended public protection sentences and indefinite sentences for public protection. Some 728 of the first type of sentence have already been passed since April 2005, and 679 of the other type. Secondly, there are improvements in our risk assessment systemthe offender assessment system, or OASys, tooland, thirdly, there is better management of risk by probation officers in the community.

Security Guard Companies

Eric Illsley: If he will make a statement on the Security Industry Authority approved contractors scheme for security guard companies.

Paul Goggins: I announced the details of the Security Industry Authority approved contractor scheme on 16 February. The ACS should become a symbol of quality that will indicate to prospective clients and their insurers that an ACS firm conforms to industry standards.

Eric Illsley: I am grateful to my hon. Friend for his response. In authorising that approved contractor scheme, he also gave authorisation for other existing schemes to be able to passport through authorisation for companies to operate in this field, but it appears that the Security Industry Authority has precluded any other approval company from operating in the sector because of its insistence that every other scheme complies with every aspect of its own scheme. Will he consider that matter again with a view to allowing the other schemes entry into the area, as he first envisaged?

Paul Goggins: My hon. Friend is something of an authority in this subject and I would be happy to consider his point more carefully, but he is aware that, after considerable consultation, we put in place the approved contractor scheme, which can be reached in two different ways: either by using the Security Industry Authority handbook or through other existing standards. The important thing is to make sure that we have a high level of quality in the security industry as a whole. As a result, those who are on the ACS are able to deploy a small number of their staff, pending the issuing of their licence. However, I am happy to consider his suggestions and have some further discussion with him.

Custodial Suicides

Mark Lancaster: What assessment he has made of the trend in the number of suicides of those held in custody over the last five years.

Fiona Mactaggart: Suicide rates in prisons are falling at present and the reduction in the number of self-inflicted deaths is demonstrated by a reduction in the three-year rolling average. The number of self-inflicted deaths this year is lower now than in 200001 and we expect the total number of deaths this year to have fallen for the third consecutive year.

Mark Lancaster: Why do local male prisons house just 35 per cent. of the prison population, yet account for 60 per cent. of suicides?

Fiona Mactaggart: That is partly because of the throughput. We know that the greatest moment of risk for the self-inflicted death of a prisoner is in the early daysthe first few daysin prison. That is one of the reasons why we have put so many resources into improving a prisoner's initial reception into a prison. Local prisons of the kind to which the hon. Gentleman refers have the most receptions and are thus the prisons in which the highest number of people spend their first few days after admission. Those are the places where we really needwe have been putting a lot of effort into thisto step up our protection methods so that we reduce the distress that people feel following their receipt into prison and thus reduce the risk of them killing themselves.

Licensing Laws

Hugh Bayley: What assessment he has made of the impact of the new licensing laws on drink-related crime and disorder.

Paul Goggins: The Home Office is currently evaluating the impact of the new Licensing Act on levels of alcohol-related crime and disorder in England. The final results will be available by the end of 2007.

Hugh Bayley: I congratulate the Government on introducing changes to the licensing regime, which have resulted in a significant decrease in drink-related crime and disorder in my constituency of City of York. Only a small number of people go out for a drink and then cause trouble, but will my hon. Friend consider widening the range of offences that can lead to a penalty of being banned from licensed premises?

Paul Goggins: I am happy to consider my hon. Friend's suggestion. The police and other agencies in his area should be warmly congratulated on the successful work that they did during the alcohol misuse enforcement campaign. I am sure that he will be delighted that during the six weeks of the campaign, alcohol-related violent disorder reduced by 20 per cent. in his constituency.

Philip Hollobone: What assessment has the Minister made of the extent to which the powers in the 2003 Act to close premises that are linked to violent behaviour have been used since the law came into force?

Paul Goggins: We are still looking carefully at the emerging evidence. I assure the hon. Gentleman that those powers will be used by the police and licensing authorities when particular establishments are seen to be a focus of alcohol-related disorder. We will not tolerate that, and the powers are there so that the police and local authorities can act.

Police Restructuring

Ashok Kumar: If he will make a statement on progress with his plans for police force restructuring in the north-east.

Hazel Blears: The Home Secretary's ministerial statement of 3 March provided a further update on the position on restructuring, including his decision with respect to the north-east region. That instigates a four-month statutory consultation period and allows forces, authorities, and local authorities to comment on the Home Secretary's proposals. We will provide further support, through existing links with Her Majesty's inspectorate of constabulary and the Home Office, for all forces in the region in any preparations that they may wish to make in respect of implementation planning.

Ashok Kumar: I thank the Minister for that reply. When the final option has been considered by the Home SecretaryI think we all know that the option will be the one that he has outlined so farwill he be willing to put it to a referendum of the people of the north-east? After all, we had referendums on the mayor and the north-east assembly, so why should we not have one on such an important matter as police restructuring?

Hazel Blears: I understand the strength of feeling that my hon. Friend expresses on behalf of his community, but it is right and proper that we take into account the professional and expert advice that we have from HMIC on getting the right level of protective services for people in the whole of the region. It is important that we examine policing across England and Wales to ensure that we can respond to the serious threats that face us and establish neighbourhood policingI am sure that he welcomes that in his constituencythat does not get abstracted to deal with serious incidents. I am afraid that I cannot promise my hon. Friend that he will get the referendum that he wants.

Roger Gale: What assessment he has made of the likely impact of hisproposed police force amalgamations upon neighbourhood policing.

Hazel Blears: Since the beginning of the consultation process in September 2005, the Home Secretary has made it consistently clear that the main focus of restructuring the 43 police forces in England and Wales is to enable forces to provide the full range of protective services at level 2. This must be done while maintaining and enhancing neighbourhood policing at a local level in all police forces. The basic command unit will remain as the primary tool in ensuring that the Government pledge that neighbourhood policing is extended to all communities by 2008 is achieved.

Roger Gale: The lead spokesman on neighbourhood policing of the Association of Chief Police Officers has expressed the view publicly that the introduction of the mergers of police forces is likely to distract attention and resources from neighbourhood policing and is likely to weaken the cause of the one element of the Government's policy that might just do something about antisocial behaviour. Given that the Home Secretary has indicated that he prefers to listen to the police rather than the Prime Minister's delivery unit, why is he not listening to the police about that?

Hazel Blears: We work extremely closely with Matt Baggott, the chief constable of Leicestershire, who is leading the neighbourhood policing programme team. He is doing an excellent job and he welcomes the additional resources that this Government have put into neighbourhood policing88 million this year, 350 million next year and an extra 14,000 police officers over and above the number that the Conservatives were able to put into policing. I have no doubt that the amalgamations will enable us not only to tackle the serious nature of organised crime, but to enhance our neighbourhood policing teams, which are being established across the country. The hon. Gentleman will have heard from colleagues on both sides of the House how much they welcome that, and I am determined to keep our focus where the public want it to be.

Party Political Funding

Bridget Prentice: With permission, I wish to make a statement on amendments to the Electoral Administration Bill. The Government intend to amend the Electoral Administration Bill, currently before the House of Lords, to make it compulsory for political parties to disclose any loans they receive. That is an issue that affects all political parties[Laughter.] I hope that the Government, all the political parties of this House and the Electoral Commission will be able to work constructively together to find a solution that allows for transparency and fairness.
	My intention is to achieve as great a transparency for loans made to political parties as applies to donations under the regime in the Political Parties, Elections and Referendums Act 2000. My right hon. and learned Friend the Secretary of State for Constitutional Affairs has today written to the leaders of all political parties represented at Westminster, and to the Electoral Commission, seeking their views on the elements of a reporting regime, including whether it should be retrospective. I have placed a copy of his letter in the Library of the House.
	The Prime Minister has announced that Sir Hayden Phillips will conduct a review of the funding of the political parties. The terms of reference of the review were announced earlier today, and I have placed a copy in the Library.

Oliver Heald: I thank the Minister for her usual courtesy in giving me early sight of her short statement. I welcome the inquiry into the funding of political parties under Sir Hayden Phillips and the terms of reference to which she referred, a copy of which is in the Library. An inquiry was inevitable, given the revelations of the past few days, and we are happy to give our full co-operation to Sir Hayden. However, why is he undertaking the review and not the Electoral Commission? It seems inexplicable. The Government set up the commission to oversee such matters. The Minister knows that the commission has produced a report already on the funding of political parties and it has a credibility on the issue that, frankly speaking, no politician or civil servant is likely to match. Despite Sir Hayden's ability, surely the commission was the obvious choice.
	Is the Minister able to shed any light on how it was possible for such large amounts of money to enter Labour coffers in loans without the full knowledge of Labour's leading figures? Perhaps it is understandable that the Deputy Prime Minister would not be told, but can it really be sustainable that the treasurer of the Labour party was not informed? Why were the fundraising activities[Interruption.] I hear the words purer than pure, but I do not think that we need to go back to those long-ago days. Why were the fundraising activities centred on 10 Downing street rather than Labour headquarters? Does not that raise concerns that civil servants may have been put into situations too close to politics, and not for the first time under this Government?
	The only leading figure who knew what was happening was the Prime Minister. Does the Minister agree that he acted wrongly in not being open with his colleagues, his party and the country? His behaviour caused the crisis.
	The Minister says that loans should be declared and she wants to change the Electoral Administration Bill[Interruption.] I will treat that positively and co-operatively. However, that Bill was in the House for months and nothing would have been done if Jack Dromey had stayed silent.
	Can the Minister explain why Sir Hayden is apparently to have so longuntil the end of 2006to report? Does not that mean that further changes to the law will have to wait for 18 months, given the timing of the Queen's Speech? Does she agree that the matter is urgent? Does she also agree that the review of party funding must include trade union donations, just as much as company and individual ones?
	An important part of solving the crisis should be cross-party co-operationsitting down together to work out a fair and transparent system of funding and how to take honours out of the funding of politics. The Minister knows that my right hon. Friend the Member for Witney (Mr. Cameron) is writing today to the Prime Minister and to the right hon. and learned Member for North-East Fife (Sir Menzies Campbell) suggesting such talks. Will the Government sit down with the Opposition and other parties to discuss the important proposals put forward by the Conservatives to clean up party political funding?

Bridget Prentice: I would have hoped that the hon. Gentleman could come to the House in a slightly more conciliatory fashion, given that my statement specifically says that we want all parties to be involved in the discussions.
	The hon. Gentleman asks why Sir Hayden Phillips has been asked to conduct the review. The hon. Gentleman, like many Members, knows that Sir Hayden is an extremely well-respected and experienced civil servant, who has dealt with all parties and who will certainly look at the issue with a view to helping all parties to come to a proper conclusion.
	The hon. Gentleman asks why the issue had not been included in the Electoral Administration Bill, but when discussions about party funding took place in 2000 no one in the House suggested that loans should be part of the Bill. That Bill is currently going through the House of Lords and we can include amendments to it this very week, so when he asks for urgency in the matter I can tell him that no one is acting with more urgency than the Government.
	The hon. Gentleman asks that trade union donations be taken into account. He might want to reflect on the fact that not only trade union donations but donations from all sorts of individuals and institutions should be taken into account. He will remember that the Government prevented donations from people living outside this country ever being part of our party political system.
	Finally, the hon. Gentleman asks why the report would be at the end of 2006. If it is possible for that timetable to be brought forward, no doubt it will be. However, I hope that in the spirit of co-operation, which he remembered to mention towards the end of his questions, he will make sureas we want to dothat every political party, the Electoral Commission and all the stakeholders involved have an opportunity to contribute properly, so that we reach a decision that will sit properly and benefit our democracy for the future[Interruption.]

Several hon. Members: rose

Mr. Deputy Speaker: Order. The House should recognise that it is probably under very close inspection from the public where this matter is concerned. We do our reputation no good if we trade insults from either side. Before further questions are put, I remind the House that the Minister is here in her departmental responsibility, answering for her Department and not for any political party.

Simon Hughes: From the Prime Minister's announcement of a general review of funding of political parties on Thursday to the Government's conversion to disclosure of loans to political parties on Monday is a welcome and, if I may say so, speedy direction of traveleven if Thursday's announcement was extremely late, given all the press that there has been in past years, hesitant, and made in undesirable circumstances.
	I have four specific questions for the Minister, representing her Department. Does she and do her colleagues agree that loans are potentially much more significant in terms of influence on the political process than outright gifts, because people can renounce claiming them back or ask for them back, and therefore have much more influence during that process? Obviously, they need to be treated in the same way.
	Do Ministers now agree that significant loans made in the past 10 years should all be disclosed? If that is not done, the public will not be able to judge what the link is between fees and funds on the one hand and favours on the other.Do Ministers now accept that in a modern, pluralist democracy, nobody should be able to buy their way into a seat in either of the Houses of Parliament? Do Ministers, from the Prime Minister downwards, agree that it is time that we converted the funding of political parties in Britain back to a system in which ordinary people influence and control political parties according to their interest and their commitment and not according to their wealth?

Bridget Prentice: I welcome the hon. Gentleman to his new position dealing with constitutional affairs.
	Some people would ask why loans should be regarded as more significant than donationsafter all, a commercial loan has an interest rate attached to it, so some would argue that a donation would be a more influential form of funding. However, Sir Hayden's review will take account of all of those issues.
	The hon. Gentleman asked about publicising loans made in the past 10 years. I cannot say at this stage whether there will be retrospectivityif that is the correct word in that respect, but I understand that the Labour party is today publicising all those people who have given it loans. I hope that his party and the others in the House will do the same.
	Finally, on the hon. Gentleman's question about anyone being able to buy a seat in this House or any other, we would all deprecate any suggestion of that happening.

David Winnick: I welcome what my hon. Friend has said today and recognise the   changes in relation to political donations that the Government have brought aboutchanges that the Tories refused to make prior to 1997. Is it not essential at long last to separate the giving of large donations to political parties and the award of peerages and knighthoodsa practice that we know has been going on for years? I believe that the public want a clear separation between the two, and I hope that our earlier reforms will be consolidated by further changes during this Parliament.

Bridget Prentice: My hon. Friend is absolutely right: it is important that we separate the two and that the two are seen to be separate. In the past few days, we have learned that perception is always key in politics and that it is important to give the public the reassurance that everything done in this House and in the other place is done openly and with transparency. We are introducing amendments to ensure not only that that is the reality, but that that is the perception, as well.

Nigel Evans: I have great sympathy with the Minister because I assume that, prior to Jack Dromey blowing the whistle last week, she was kept in the dark, as was the treasurer, the Deputy Prime Minister and the chairman of the Labour party. The Minister says that we will have transparency in relation to loans. That is right, but should we not also consider limiting the level of loans and barring any Minister from giving any loans to any political party?

Bridget Prentice: The question of a limit will be discussed during the review, and I hope that all hon. Members and political parties will play an active and constructive part in it. I have had discussions with various colleagues over the past few days about the funding of political parties, and there are almost as many views on the subject as there are Members of Parliament. I welcome the debate, I hope that it will be constructive, and I look forward to hearing from the hon. Gentleman.

Chris Mullin: Welcome though today's announcement is, does my hon. Friend agree that we need to go much further if we are to re-establish public confidence in the funding of political parties? Will Sir Hayden Phillips consider, among other things, imposing a far more drastic cap on what can be spent nationally by political parties, and imposing a very drastic cap on what can be donated by individuals? Could he look at whether small donations should be made tax deductible for the political party of one's choice, as that is the one form of funding of political parties that the public might support? I appreciate that some of those matters are for my hon. Friend's many superiors, but will she undertake to pass the word on?

Bridget Prentice: I am grateful for my hon. Friend's remarks. I thought that we were a little more egalitarian in this party than to espouse the idea of having superiors but, nevertheless, I accept what he said. It might be helpful if I briefly tell the House that Sir Hayden's review will examine the case for state funding, including whether or not it should be enhanced in return for a cap on the size of donations. He will consider, too, the transparency of funding of political parties, so I hope that that covers some of the questions asked by my hon. Friend.
	I remind the House that Sam Younger said in The Times:
	Political parties are important in a democracy. They need funds in order to organise themselves, develop policies and put themselves forward to the electorate.
	It is a question of getting the balance right between state and private funding, and that is part of the debate.

Eric Forth: Why did the Minister decide to make her statement today?

Bridget Prentice: Because the Prime Minister and the Government thought that it was important, given that the Electoral Administration Bill is proceeding through the House, to take the opportunity to make a statement at this time.

Dennis Skinner: Is my hon. Friend aware that, contrary to all the talk in the media, the sad fact is that over the past 20 years or more there has been a disinclination among the public either to join parties or to contribute to them? They then complain, wherever the money comes from. Can I suggest to my hon. Friend that the last people we want lectures from are the party of Ashcroft, Aitken and the rest? We do not need any lectures about a Swiss rollover by the Liberal Democrat but if we did go further we could abolish the House of Lords and the honours lists so that there would not be very much left to buy.

Bridget Prentice: My hon. Friend leads me very temptingly down a path that it is not appropriate for me to take, given the nature of the statement. It deals with the funding of political parties, so he is quite right to refer to other political parties. This is something in which we all have a stake, so we should all work on it together. As for the reform of the House of Lords, he will wish to know that we look forward to proceeding with change there very speedily indeed.

Julie Kirkbride: The Minister just said that perception is important in politics, so does she agree that the public perception of this sorry affair is that the Prime Minister has been caught red handed, selling peerages in return for party funding?

Bridget Prentice: The Prime Minister, in his statement last week, took responsibility as the leader of the Labour party. I think that that was right and proper, and something that I would expect him to do.

Geraldine Smith: I welcome the Minister's statement today. It is quite right that all political parties should declare any loans that they receive and it is right to review party political funding, but I would err on the side of caution in going down the road of state funding for political parties, which would go down like a lead balloon with the public. The way forward has been mentioned alreadywe should make the cap on spending at elections much lower than at present. I am sure that members of the public will not mind if they only receive one DVD instead of three. [Interruption.]

Bridget Prentice: Of course, as my right hon. Friend the Leader of the House says, it might depend on whom those DVDs are from. However, I hear what my hon. Friend says about state funding. She reflects a view that, I suspect, is held quite widely. That is part of the reason why the debate about getting the balance right is important. As I have already said, a reference to the cap on funding is in the review.

Quentin Davies: I am of the view that most party political funding is wasted anyway on embarrassing and probably counter-productive advertising campaigns and dubious spin doctors, on the part of all the major parties. Was the hon. Lady, in her response to my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), seriously trying to tell the House that the occasion of her statement today had nothing whatever to do with the scandal and revelations of the past few days? If so, I fear that she may be unnecessarily damaging her own credibility, as well as setting a very poor example of candour in the House. Does she accept that not to reveal a loan, as a financial relationship, is thoroughly disingenuous and misleading?

Bridget Prentice: Obviously, the discussions that have been taking place over the past few days are ones to which we must all respond. It is not perhaps in the hon. Gentleman's best interest to try to say that this is something that affects only one political party[Interruption]or to imply that that is so. I hope that he agrees that it is necessary for us all to work together.
	As I said earlier, it is important to re-engage the public in democracy. It is important that they see that we are transparent in the way that we are funded. There is a dichotomy: we do not want political parties to be funded by shady individuals from abroad; nor do people necessarily want to pay for them through their taxes. We must find a way that gets the balance of party political funding rightwhether partly through the state or partly through private donationsbut whichever way that is done, it must be transparent, and that is what we hope to achieve.

Andrew MacKinlay: Has the Minister noticed that Sir Hayden has been honoured? Is there not a case for appointing a real person to conduct the review, rather than a member of the establishment, the glitterati, that magic circle that runs the country, whether it has a Labour or a Tory Government? Will she support an amendment to disqualify from getting a peerage anyone who makes a substantial loan or payment to a political party? That is what is necessary, and on that, with the greatest respect, the Prime Ministershe might find this hard to believeis wrong.

Bridget Prentice: I think that all political parties in the House that propose people for appointment as working peers would say that they put forward the names of people who have contributed greatly in public life, so I would not want to go down the road of banning every form of donation. I am sure that Sir Hayden will be more than delighted to hear my hon. Friend's views on what should be in the review.

Elfyn Llwyd: The hon. Lady's statement is most welcome today, but it would have been even more welcome if it had been made before last week's revelations. She referred twice in her statement and once in an earlier response to the word transparency. In the interests of transparency and gaining some ground back on the way in which the public consider politicians in general, can she tell the House whether there will be an investigation of recent events by the Labour party under the Honours (Prevention of Abuses) Act 1925?

Bridget Prentice: There has been no abuse under the 1925 Act.
	We didn't publish the names, because that was not the law, and we've complied with the letter of the law, we've followed it absolutely.
	That was said by the hon. Member for Tatton (Mr. Osborne) on a broadcast made yesterday. The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) should be aware that the 2000 Act allowed for loans to be made in the way that they have been made. We are tabling an amendment to the Electoral Administration Bill to ensure that there is transparency.

Alan Simpson: I welcome the Minister's statement and her announcement that the Labour party is opening its books in respect of the loans and gifts made to it. Embarrassing as it may have been to Labour party members to discover that we were in receipt of loans, will my hon. Friend confirm that although Labour Members knew next to nothing about those loans, the House knows absolutely nothing about loans and gifts made to the Tory party during the same period? Will she confirm that the terms of Sir Hayden's inquiry will include a 10-year retrospective on loans as well as gifts, and that it will explore the terms of loans and whether they varied during the period of the loan? Will he make recommendations on the most effective way of severing any connection between financial assistance to political parties and the honours system?

Bridget Prentice: My hon. Friend is right. It might be appropriate to remind the House that it was this Government who brought in the 2000 Act and set up the Electoral Commission. We have said that we want to make the system even more transparent. I know nothing about loans to the Tory party and it is not my place to make any comment on them from the Dispatch Box. Nevertheless, I can assure my hon. Friend that Sir Hayden's review will be able to examine funding right across the board and, if he comes to a conclusion about the retrospective nature of that funding, I am sure that he will bring it to the attention of the House.

John Bercow: Given that it is vital to dispel any notion that the funding of any political party secures access to the legislature, is it not the most important and urgent responsibility of the Government to bring forward proposals for a predominantly elected House of Lords, because that is the only credible and defensible basis upon which to constitute the upper House in the 21st century?

Bridget Prentice: As I mentioned earlier, the reform of the House of Lords is a matter that we are studying closely. I hear what the hon. Gentleman says. I know that there are various views in the House. I may not entirely share his views in that respect. It is relatively new for the Conservative party to believe in a non-elected House

John Bercow: Not for me. I have always believed that.

Bridget Prentice: It may not be new for the hon. Gentleman, but that is a debate that we can continue.

Gavin Strang: Is my hon. Friend aware that we on the Labour Benches are entitled to be proud of the 2000 Act, which introduced a new procedure for donations? Acknowledging that there is a loophole that allows parties to receive commercial loans, does my hon. Friend accept that her statement[Interruption.] Opposition Members might allow others to speak. I think that they are a little on the defensive. [Interruption.] Yes, I do. No one tried to amend the legislation before. Will my hon. Friend confirm that we are going for maximum transparency in respect of all loans and all donations to all political parties as soon as possible?

Bridget Prentice: My right hon. Friend is right. When the Act was passed in 2000, no one in the House thought about the effect of loans. As my right hon. Friend the Secretary of State said earlier today, the system has not been cleaned up enough and we need to change it. That is why we are introducing the amendment to the Electoral Administration Bill. We have a proud record of trying to bring about greater transparency, and we shall continue to do so.

Peter Bone: Does the Minister think that the British public should regard this Government and their Prime Minister as whiter than white? If not, what advice would she give to the Prime Minister about his future?

Bridget Prentice: The Prime Minister, along with this Government, has made radical changes in this country. We have introduced the minimum wage, put more money than anyone else has done before into hospitals and schools, reduced unemployment and made the economy more sound. The record of this Government and Prime Minister is second to none, and I ask the hon. Gentleman to reflect on that before he goes any further.

Jeremy Corbyn: I listened very carefully to the answers given to the hon. Member for North Southwark and Bermondsey (Simon Hughes) and my hon. Friend the Member for Nottingham, South (Alan Simpson). Does the Minister accept that, in disclosing the nature of the loans given over the past 10 years, we need to know why the people making those loans thought it necessary to keep their names secret; what conditions were placed on them by the people making the loans; what interest rates were paid on them and whether those interest rates have varied during that period? If there is to be any confidence in the political system, it has got to be absolutely open and above board as to why people felt it necessary to keep their names secret while making any loan to any political party.

Bridget Prentice: There are a variety of reasons why people wish to keep their names secret when they give loans or even donations to political parties. I think we are all pretty much aware of what they are. However, we feel that we need to go further than we went in the 2000 Act, which is why we are bringing forward the amendments. I hope that my hon. Friend will also contribute to the debate on how political parties should be funded. The bottom line, if I may put it that way, is that we make things as transparent as possible, so that people have confidence in the democratic process and so that political parties re-engage with the public in the way that we would all like.

NHS Redundancies (Staffordshire)

Paul Farrelly: I beg to ask leave to move the Adjournment of the House under Standing Order No. 24, to discuss a specific and important matter that should have urgent consideration, namely, the announcement last Thursday of up to 1,200 staff reductions at the University hospital of North Staffordshire. I apologise, Mr. Deputy Speaker, if I am a little out of breath; I thought that the statement would continue rather longer.
	My local hospital is one of 18 NHS trusts in the country earmarked in January by the Secretary of State to receive the attention of turnaround teams. It is the first to announce its financial recovery plan. Locally, of course, the cuts are devastating. They include 573 nurses, midwives and auxiliaries, and one in five of all nursing staff. The situation at the hospital, however, illustrates more fundamental issues about governance, management and control across the NHS.
	This was a hospital that was allowed to drift by its strategic health authority and the NHS Executive, and right up to the desk of the former NHS chief executive, the soon-to-be Lord Crisp. It was allowed the luxury of letting its former chief executive serve one year's notice before quitting for personal reasons. Even then, last year, it could appoint only an acting chief executive, who was moved on in January. That followed the resignation of the chairman and all the non-executive directors days before Christmas. Throughout this period, it employed accounting staff who evidently found numbers troublesome. That is all the more surprising as the numbers have to add up for a brand-new private finance initiative hospital that has been planned for years.
	Since Christmas, local MPs have been trying to get to the bottom of the hospital's projected 18 million deficit this year. We have failed to be able to do so. At a meeting in mid-February, we were promised the details by the SHA, but instead, all we had last Thursday, out of the blue, was talk of 43 million savings over two years. The document issued to staff giving 90 days' notice of redundancy is a disgrace in content and tone. This is a hospital, not a business going bankrupt. This is no way to secure the continued staff good will on whose basis our NHS operates. Despite its consequences, the notice was issued on no higher authorisation than that of the acting chief executive of the hospital. Much of the deficit is down to national policies, the consequences of which are coming home to roost. A great deal of change is taking place, but it is important that the response to the deficits does not veer out of control.

Mr. Deputy Speaker: I have listened carefully and, in the circumstances, sympathetically to the hon. Gentleman. I must give my decision without giving any reasons: I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 24, and I cannot therefore submit the application to the House. However, I am sure that he has noted that there is an estimates debate this afternoon on the NHS financial deficit, and I commend that thought to him.

Points of Order

Quentin Davies: On a point of order, Mr. Deputy Speaker, The Mail on Sunday yesterday contained an article that included what were purported to be details of the living away from home allowance claims made by a right hon. Member of the House. I have absolutely no idea whether those details were correct or whether the complaints made about them are sustainablethey may have been completely invented. If there has been a leak from the Fees Officeprima facie, someone in the Fees Office may have sold information available to them in the course of their dutieswill you ensure that an inquiry is undertaken to remove that terrible suspicion from people who serve the House on the whole extremely honourably and well?

Mr. Deputy Speaker: I have no reason for supposing that there has been any lowering of standards by an Officer of this House, and I did not necessarily take that implication from that article, which I also saw. There is a procedure to deal with that matter, and if there is any ground for suspicion, I am sure that it will be brought up in the proper manner with the Parliamentary Commissioner for Standards.

Colin Challen: On a point of order, Mr. Deputy Speaker, may I draw your attention to a statement made by the Leader of the Opposition at Prime Minister's Question Time on 15 March:
	We believe in parliamentary scrutinyI know that the Prime Minister probably cannot even spell those words, but we happen to think that it is important.?[Official Report, 15 March 2006; Vol. 443, c. 1452.]
	May I subsequently draw your attention to the Ninth Standing Committee on Delegated Legislation, which considered the important Civil Proceedings Fees (Amendment) Order 2005, because not a single Opposition Member turned up and the matter was discussed in their absence? Should the Leader of the Opposition be admonished for misleading the House?

Mr. Deputy Speaker: That is not even a point of order for the Chair.

Bob Spink: On a point of order, Mr. Deputy Speaker, in view of the importance of this matter to many hon. Members, have you received any indication from the Government that a Minister will come to this House to make a statement or answer in detail on the ill-considered and apparently inconsistent merger of police forces?

Mr. Deputy Speaker: I have not received notice of an intention to make an oral statement to the House, but I note that the Home Secretary is due to make a written ministerial statement this very day. I know nothing else at the moment that relates to hon. Members' understandable interest in the matter.

John Bercow: On a point of order, Mr. Deputy Speaker, I seek your guidance. Given that last Thursday afternoon, in a move that was certainly unusual and arguably somewhat discourteous, the Government withdrew from the consideration of the House their own business, namely Lords amendments to the Immigration, Asylum and Nationality Bill, have you received an indication that a Minister intends to come to the House and tell hon. Members when we will have an opportunity to debate the business that we were supposed to consider on Thursday afternoon?

Mr. Deputy Speaker: I have no such information that I can share with the hon. Gentleman, but it is possible that the matter will be alluded to in the next business statement, or perhaps he can contrive that it should be.

Quentin Davies: Further to the advice that you gave me a moment ago, Mr. Deputy Speaker. You said, rightly, that if there is any suggestion of an abuse by a Member in the allowance system, that is a matter for the Parliamentary Commissioner for Standards to investigate. Of course, I accept that that is right. My point, however, related to the possibility of corruption by a member of the staff of the Fees Office. I am not aware that the parliamentary commissioner has any jurisdiction over employees of the House of that kind, and my question to you really concerns what procedure might be available to investigate such a suspicion if unfortunately it were to arise as a result of the article to which I referred.

Mr. Deputy Speaker: The hon. Gentleman is now making a very grave allegation, having previously said to me that he had no idea whether there was any truth in the matter at all. I think that one should be very careful in making an allegation against someone who cannot answer back to this House. If there is any breath of a suggestion of impropriety on the part of a member of staff, I am sure that the head of the department, at the very least, will examine that possibility to see whether there is the slightest bit of truth in the matter. I think that it is probably better left there.

ESTIMATES DAY
	  
	[2nd Allotted Day]
	  
	SUPPLEMENTARY ESTIMATES, 200506
	  
	Ministry of Defence

[Relevant documents: Fourth Report from the Defence Committee, Session 200506, HC 980, on Costs of peace-keeping in Iraq and Afghanistan: Spring Supplementary Estimate 200506; and Ministry of Defence Annual Report and Accounts 200405, HC 464.]
	This Estimate is to be considered in so far as it relates to costs of peace-keeping in Iraq and Afghanistan (Resolution of 16th March).
	Motion made, and Question proposed,
	That, for the year ending with 31st March 2006, for expenditure by the Ministry of Defence
	(1) further resources, not exceeding 1,776,067,000, be authorised for use as set out in HC 827,
	(2) a further sum, not exceeding 1,889,814,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
	(3) limits as so set out be set on appropriations in aid. [Mr. Cawsey.]

Mr. Deputy Speaker: I have imposed a time limit of 10 minutes on Back-Bench speeches which applies after the opening speech.

James Arbuthnot: I am grateful, Mr. Deputy Speaker. Because of that time limit, I shall do my utmost to keep my own remarks to 10 minutes, as I know that many Members want to speak in both debates.
	The motion before us seeks the House's approval for the Ministry of Defence's spring supplementary estimatea request for an additional 1,890 million, of which the largest part is to meet the costs of peacekeeping in Iraq and Afghanistan. I know that in making a speech one is meant to begin at the beginning, but I wish to begin at the end, so I shall go straight to the conclusion of the Defence Committee's report:
	We do not propose that the House should refuse the request for resources set out in the MoD's Spring Supplementary Estimate. On the contrary, we believe it is essential that peace-keeping operations in Iraq and Afghanistan should be properly funded.
	If anything, we are concerned that too little is being spent, not too much. The Defence Committee, of which I have the great honour to be Chairman, hopes that the House will approve this request for resources. We believe that our service personnel should have the equipment that they need. However, we have several concerns about the way in which the Ministry of Defence presents its estimates to Parliament and thought that the House should have an opportunity to consider them before it approves the spring supplementary estimates. We are therefore grateful to the Liaison Committee for agreeing that our report should be debated.
	First, we are concerned about the inadequacy of the information that the Ministry of Defence provided to Parliament in support of the request for resourcesa request for a very large amount of public money. The initial estimates memorandum, which all Departments provide to their Select Committees with the estimates, is printed in the evidence with our report. It does not add very muchonly a breakdown between the operations for Iraq and Afghanistan. That is in table 1 of our report. We thought that that was not good enough and asked the Ministry of Defence for more information. Its more detailed breakdown is set out in tables 2 and 3 of our report. We hope that next time the Ministry of Defence will give that level of information in the estimates memorandum when the estimates are first published. That will give us enough time to report to the House, if necessary, in good time for the estimates day debate.
	Secondly, we are concerned about the high level of contingency that is contained in the estimate. Tables 2 and 3 of our report show that the estimate contains 69 million contingency in resources and 77 million contingency in capital, so we asked the Ministry of Defence why such a large amount of contingency was necessary, especially at such a late stage in the financial year. The response was that it was
	due to the often rapidly changing operational situation
	and the
	need to be able to respond to the rapidly evolving threat to our forces.
	The Defence Committee fully accepts the need for the Ministry of Defence to have financial flexibility to respond to changing threats, buy new equipment and so on when the operational need arises. There may be different views on whether it is a good thing to deploy in Iraq and Afghanistan, but there can be no such difference about the need for our forces to be properly and fully protected. Force protection, especially against increasingly sophisticated improvised explosive devices, is a matter of life and death for our service personnel as they serve this country in Iraq and Afghanistan. Equipment often needs to be developed at short notice. Urgent operational requirements cost a lot of money and we need to ensure that it is properly managed.
	In January, the Committee visited the Defence Procurement Agency and were briefed by the special projects integrated project team on the acquisition of urgent operational requirements. We were impressed by the speed and efficiency of the acquisition process. The team's close connection to operations gave its members a strong motivation and they fed back lessons from the field. We were told that, in one project, the contract was let within three days of notification of the requirement and the equipment was in the field in three weeks. That is an extraordinary achievement.
	We accept the need for flexibility, but that does not absolve the Ministry of Defence of the requirement to make proper financial forecasts. We shall look closely at the out-turn costs in the annual report and accounts to ensure that the Ministry is not routinely overestimating the costs of operations. Our report recommends that the annual report should contain significantly more detail on the cost of operations than it has done in the past.
	Our third concern is about arrangements whereby the Ministry of Defence waits for the spring supplementary estimates before seeking Parliament's approval of expenditure on operations. I am afraid that we did not understand why the Ministry does that. It may be a surprise to some hon. Members that the Ministry makes no provisions in its main estimates for operations, even if they are well established. In effect, we are being asked to authorise expenditure in arrears.
	The Ministry's explanation for that arrangement is that
	we cannot provide a detailed forecast at the beginning of the financial year that is accurate to the standards which we would normally place before Parliament for figures for that financial year.
	In our view, the fact that the Ministry cannot provide information that is accurate to a high standard is no reason for not providing Parliament with any information at all. We therefore recommend that, in future, provisions for operations that are well under way should be made in the main estimates in the usual wayif necessary, with a large element for contingency.
	We also recommend that the Ministry provide to our Committee regular updates of the cost of operations, in the same way as it provides information to the Treasury. That would be a welcome demonstration that the Ministry recognises the need for public accountability. It should give us the clear impression that it regards Treasury approval of its expenditure plans as no more important than parliamentary approval. Parliamentary approval should not be a rubber stamp.
	Perhaps the attitude of the Ministry of Defence is influenced by the fact that funding for operations does not come from its allocated defence budget but is new money from the Treasury. However, it is all public money and it should all be subject to the usual process of parliamentary authorisation.
	Our report deals briefly with the costs of operations in the Balkans. We recommend that, in future, provision for such operations should be set out in the Ministry's main estimates rather than transferred in from the Foreign and Commonwealth Office at the spring supplementary estimates.
	Our report also touches on the future costs of the deployment to Afghanistan. It is not enough for Ministers to tell us that the cost of the deployment will be around 1 billion over five years and we will press the Ministry of Defence for more information on costs in our inquiry into the Afghanistan deployment.

Tobias Ellwood: I note that my right hon. Friend's excellent report calls for more information. A request was made by his predecessor in the spring supplementary estimate in 2005 for more information on the figures that had been provided, yet that information is not available. Why does my right hon. Friend think that his own request will be more successful?

James Arbuthnot: Because we have a listening Minister and a listening Government. I am sure that, this time around, the Minister will listen in a way that perhaps did not happen last time around. The value of this debate, and my hon. Friend's timely intervention, is that it will ensure that that happens.
	Finally, our report outlines the reductions in the overall size of the armed forces, set out in the votes A for the financial year 200607, which the House will be asked to approve after this debate. They reflect the significant draw-down in the size of the armed forces, particularly the Royal Air Force, in line with the Government's future capabilities decisions. We do not propose that the House should refuse to approve the votes A, though we do have concerns about the overstretch of elements of the armed forces and are looking closely at that.
	I am sure that the Minister will respond to our recommendations in a positive spirit. I have no doubt that his commitment to democratic accountability is second to none and I hope that he will support our aim of encouraging greater transparency in the way in which his Department operates. We look forward to receiving in due course the Ministry of Defence's considered response to our report. The Defence Committee will look at the main estimates closely when they are presented to the House and we will bring any concerns to the attention of the House. I hope that the Minister will not again take parliamentary approval of the estimates for granted.

Nick Harvey: I commend the right hon. Member for North-East Hampshire (Mr. Arbuthnot) and his Committee on their important report. The sums of money in question are certainly large, although that is unsurprising in view of the scale of the operations involved, and of the recent commitments to increase them. I note with regret that some of the points that the Committee has raised were also raised a year ago, but have not elicited a response from the Government. It does not make sense for all this to be approved retrospectively. Of course, it is impossible for the Ministry of Defence to know at the outset of the year exactly what the costs of its activities are going to be over the year, but Parliament should surely be given more information than it has been given in the past.
	From time to time, we are inevitably asked what our involvement in Afghanistan and, in particular, in Iraq has cost us in total. The Government have published the figures for expenditure on operations and on capital equipment in each of the past three financial years, and will no doubt do so for the current year. However, a press release from the MOD's Defence Analytical Services Agency last September made the important point that the costs of peacekeeping in Iraq are just that, and that anyone trying to keep an account of the total expenditure must realise that combat operations have not been included in the figures that have been quoted. Will the Minister therefore confirm whether the published figures include combat costs? He has said in a previous parliamentary answer that it is not possible to identify separately the cost of combat operations. He has also made the point that those costs span two financial years, as the combat activities began in March 2003. Are the Government really telling us that they are unable to make an assessment, or even an estimate, of combat activity costs?
	A needs assessment was carried out in October 2003 by the World Bank, in which it considered the tasks that lay ahead for the allies. By that stage, the armed combat phase had ended, and it was looking forward to the costs of reconstruction. The figures being produced, it noted, worked on the following assessment at the outset:
	a main underlying assumption was that there would be a stable security environment that would allow international and local staff and consultants to move freely around rural and urban areas
	to carry out their work. Given that that is no longer the case, it is understandable that the cost of all that work has gone up and up. Has there been any assessment of the impact of that on the running costs, and on the various other organisations involved?
	The Government have pledged a total of 544 million for the reconstruction work in Iraq. A lot of that money went through the international reconstruction fund facility for Iraq. In total, the World Bank estimated that $55 billion would be required. Of the $21 billion that America was going to pay, however, only $2 billion has been disbursed. I would be intrigued to know what the comparable state of play is with British finance. Three years on, with only two thirds of the American funds and just one sixth of non-American funds pledged having been disbursed, can the Minister tell us exactly how much UK money has been allocated? The latest report of the US Special Inspector General for Iraq Reconstruction said that the UK had pledged 250 million, and yet our Government tell us that the figure is 540 million. What proportion of the UK funds pledged have been spent so far?
	With specific reference to Afghanistan, the Select Committee report asks for a breakdown of costs by financial year, and for more explanation of the 1 billion estimated cost over the five years 200506 to 200910. The Ministry has told us that it cannot go into that sort of detail. There was a report in The Sunday Times yesterday, however, about what purported to be a leaked Ministry of Defence document, saying:
	The objectives of the British mission to Afghanistan could take as long as 20 years to achieve, according to a confidential Ministry of Defence briefing.
	That is no particular surprise, because the history of engagement by foreign troops in Afghanistan has never been happy, and no one should underestimate the task of the international forces now there. If the Ministry's own officials really think that fulfilling the objectives of the mission could, in principle, take as long as 20 years, what on earth do they think that it will cost? How can they state with such precision that it will cost 1 billion? From where exactly have the Government got the figures on which to base their request for that 1 billion?
	Has sufficient money been allocated? The Select Committee Chairman said that if anything, the Committee was concerned not about the figures being surprisingly high but, in relation to some aspects, whether they were high enough. I wonder whether asking British and international troops to undertake some of the work envisaged has necessarily been assessed as the most cost-effective method. Has sufficient money been allocated in direct aid to the provinces in Afghanistan for training and capacity building for the Afghan national army and police?
	The UK is the lead nation on counter-narcotics, but how much are the Government spending on that in Afghanistan? I am not referring to the consultancy and security teams: how much help have the Afghan Government received? What measurable targets have the Government for improving and enhancing Afghan military capability?
	The Minister said in a written answer that the number of Taliban in southern Afghanistan could amount to over 1,000, but what is his assessment of their military capability? He also said that there were a range of illegally armed groups in the south, which must be the case, but that the number of people involved could not be determined. Has the Ministry really no estimate of the size and strength of those groups? Given that the British forces are expected to have a role in their disarmament and demobilisation, surely there must be some assessment of what those forces are up against.
	Does the increase in the role that we will play in Afghanistan, in conjunction with ongoing work in Iraq, mean that United Kingdom forces will continue to work beyond the planned level in the defence planning assumptions? If that is to continue throughout the three years for which the Government expect the operation to last, there must be considerable concern about the effects on retention and recruitment. Is there any new evidence on the numbers resigning? What about the effects on the reserves, who have been over-tasked, and on the availability of specialists such as medical staff? There are also questions to be asked about a shortage of airlift, both fixed-wing and helicopters. A distinction should be drawn between helicopters that can lift troops in safety, and combat or reconnaissance helicopters that do not carry troops.
	When the allied rapid recruitment force is due for relief next year, will the UK be stuck with the task of running the headquarters, or is there any realistic prospect that anyone else can take it over?
	As we know, and have seen on our television screens, the Secretary of State has spent the last few days in Iraq visiting the troops there. Although he has said that there is not, as yet, a state of civil waran assessment with which we would agreehe has nevertheless acknowledged that the situation is very serious, and that there is a danger of its tipping into civil war at very short notice. While many believe that the presence of British and American forces in Iraq is in a sense part of the problem, any suggestion of their rapid removal would only run the risk of tipping what is already a pretty desperate situation into precisely the civil war of which the Minister has warned.
	The scale of the commitments in Afghanistan and Iraq is immense, and the challenges faced by the British forces in both countries are extremely worrying and difficult to quantify. No one would expect the Government to be able to say precisely what the cost will be, but serious tasks are being undertaken, and there is a risk of serious casualties. I think that what Parliament and the British public want is a sense that there really is a Government strategy. It is clear that the intervention in Iraq has caused many difficulties, but obviously we must deal with the world as it is now.
	Afghanistan has to be helped. That will cost more in cash and in casualties than it might have if the initial effort had been sustained throughout the period for which we have been there, but we cannot ignore what remains a twofold threat from drugs and terrorism. It is also true that Iraq and Iran cannot be compartmentalised or viewed entirely separately, given their geography and their history. Isolating Iran and a long-term occupation in Iraq can only deepen the problems. Difficult as it is, finding a way of re-engaging with Iran is absolutely necessary.
	I hope that we can learn from the experiences of the past five years. Clearly, we cannot pull out of Iraq in a hurry; our work there is importantand perilous. As we take on a considerable new responsibility in Afghanistan, it will be Parliament's role to keep a very close eye on the situation. I welcome the Select Committee's report and the questions that it asks about finance. Parliament will be failing in its duty if we do not continue to hold the Ministry of Defence to account for the important work that it is undertaking.

Harry Cohen: I am grateful to the Defence Committee for producing the   report before us, and I am also grateful for the opportunity to speak in today's debate. As the Chairman of the Committee, the right hon. Member for North-East Hampshire (Mr. Arbuthnot), pointed out, the report refers to the public being kept in the dark about how the money has been spent on Iraqon which I want to concentrate todayand on Afghanistan. That is a very good point, and deserves an answer from the Minister and the Government. How do we know that we are getting value for money for what we have spent? As I say that I am chuckling ironically, because frankly, given the situation in Iraq, we are getting no value for money. One could argue that money is being spent on servicing the troops, and perhaps on reconstruction aidbut how do we know? How, moreover, do we know that we are getting good value for it?
	That is a very serious point, given the spectacular corruption cases that we are starting to see in the United States. Custer Battles ripped off tens of millions of pounds-worth of the Iraqi people's money by supplying the Iraqi forces with broken-down trucks, and Robert Stein has received a prison sentence for rip-offs amounting to millions of pounds. I am pretty sure that the money spent by the Ministry of Defence does not involve such spectacular rip-offs, but how do we know? It is important that such issues be out in the public domain.
	The Government maintain that we spent 3.1 billion on Iraq to March last year and in excess of 1 billion since then, so such spending totals well over 4 billion. But as the hon. Member for North Devon (Nick Harvey) said, that does not include combat coststhe initial costs of the warwhich, presumably, are heavy, or other Departments' costs. Where are they listed? As the Select Committee said, we do not have clear-cut accounting. That money is our taxpayers' money, but what about the great deal of Iraqi money that has been squandered? Some 23 billion-worth of their money, which was held by the United Nations and handed over to the allied forces, has gone without any result. According to an article in The Independent last November, the Iraqi people could lose 200 billion-worth of oil resources under agreements that the allies are forcing through. Lots of money and resources are going down a bottomless drain; some of those are ours, but most belong to the Iraqi people.
	Despite all that spending, the Iraqi people are actually worse off. An article by Professor Glen Rangwala, whom I have quoted in the House before, and who helped to expose the dodgy dossier, stated:
	The most thorough survey yet conducted on Iraqi life since the invasion arrived soon after the election. The United Nations Development Programme found that the average income in Iraq dropped by 44 per cent. in the year after the invasionfrom 137 per person under the last year of economic sanctions, to 77 under occupation. The percentage of mothers who die in childbirth is now over four times greater in oil-rich Iraq than over the border in resource-free Jordan. Some 63 per cent. of Iraqis live in homes unconnected to a sewage system, resulting in a series of chronic diseases afflicting the population, in comparison to only 25 per cent. in a similar situation before US-instigated sanctions were imposed in 1990. The survey estimated that 223,000 Iraqis had chronic illnesses caused by the war. The number of women of working age who are in employment, a key indicator of female empowerment, is just 13 per cent.
	I saw an article recently that showed that according to official figures, unemployment in Iraq is more than 60 per cent. I recall raising that matter soon after the occupation and saying that the situation needed to be dealt with if trouble was to be avoided. Instead, a rip-off was going on at a pace. All the contractors from outsideHalliburton and its croniestook the jobs instead of the Iraqi people. As I said, recent figures show again that unemployment among Iraqis is well over 60 per cent. There has been no change. As we heard, only 13 per cent. of women are in employment in Iraq. That remains an appalling scandal. Iraqis are no better off.
	Just this week there were some good articles in the New Statesman. Zaki Chehab's article begins:
	Kidnappings, power cuts, sectarian hatred, medical shortages, petrol queues, intimidation of women and a mass exodus of talent: all part of life in the new Iraq.
	He writes:
	There is a scarcity of basic equipment that most hospitals store in ample quantities as a matter of course . . . The situation today, the professionals insist, is even worse than in the last years of the old regime, when essential materials were in short supply because of UN economic sanctions . . . The optimism has vanished, and reconstruction has proved to be an illusion.
	There has been no visible improvement to any of the services that are basic to civil society: drinking water, electricity supply, functioning sewage systems, schools and hospitals. Drinking water used to be available from household taps, but that is no longer safe to drink. Potholes in the roads, which were a common cause of complaint in Saddam's time, not only still exist but are even bigger. There were occasional power cuts in the old days but generally the citizens of Baghdad enjoyed a regular supply. Now they are reduced to electricity for just one hour in every six each day.
	Iraqis are worse off. I put that to the Minister, because after the occupation it was made clear by the then Secretary of State for International Development, my right hon. Friend the Member for Birmingham, Ladywood (Clare Short), that where there are difficulties, it is for the armed forces to make the situation safe and then carry out the reconstruction work. That is the Minister's responsibility, but the figures show that he has not succeeded. The reconstruction has been an abject failure.
	We do not know where most of the cost has gone. The Government have talked about training the Iraqi police and the Iraqi armed forces. What about that cost? Is that something extra to be added to the costs that we have? Presumably we are not talking about the armed forces just doing their everyday job and the cost being included in that figure. If it is so important that we train the Iraqi police and armed forces, why have we not seen the figures for that? Actually, it is a pretty incredible thing to be doing, because they have cut off co-operation with us at the moment. In reality, we cannot be doing thatso where has the money allocated for that particular job gone?
	Let me quote from one last article from this week's excellent edition of the New Statesman. John Simpson writes:
	there is still no government in place, 90 days after the latest election. Where is the army
	that is what the Iraqis are saying. The article continues:
	Where are the Americans? But the Americans know their presence at the site of an attack often makes things worse, and they are less in evidence now than they used to be. So why are they in Iraq at all, people ask.
	That is a good question in such circumstances. Why are they in Iraq at all, and why are we in Iraq at all? There has been 4 billionif that is the official figureof wasted money. Not a penny of it should have been spent, and I do not think that we should spend a penny more. We should get out of Iraq.

Malcolm Rifkind: I never thought that I would follow the hon. Member for Leyton and Wanstead (Harry Cohen) and have to confess to agreeing with a great deal of what he said. I begin by quite properly declaring an interest in a public company that does business in both Iraq and Afghanistan.
	I welcome the debate not only for the reasons that my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot) mentioned, but because, in an extraordinary way, this is the first opportunity since the general election that hon. Members have had to debate Iraq and Afghanistan on the Floor of the House. The conflict has been the single greatest political disaster that the United Kingdom has faced since Suezindeed, it is far worse than Suez because that was over in a few weeks with relatively few casualtiesand here we are, three years into it. It is right that we address not only the financial costs, but the implications for British soldiers. I hope that there will be more opportunities for such debates.
	There is an important question whether the House should give its approval before this country goes to war. It is equally important that once a war has happened and there are ongoing consequences, the House should have the right to scrutinise properly the way in which the policy evolves, but that has not happened until now.
	The background to the presence of British troops in Iraq is that the war was pre-emptive. The situation was unusual and we went into the war in unlikely circumstances. I do not automatically exclude the right to have a pre-emptive war. Of course, if one knows one is going to be attacked, one does not necessarily wait until that happens before taking action to stop it.
	If there is to be a right of pre-emption that leads to British troops going to a country such as Iraq, with massive costs and casualties, we should bear in mind two fundamental considerations for both this country and the United States. First, if the United States and Britain have the right to take pre-emptive action, so, too, does every other country in the world. Any country throughout the globe that thinks itself threatened can, according to Washington and the present British Government, initiate a war simply in order to prevent one. Secondly, if pre-emptive wars are contemplated, one needs at the very least not just theories, ideas and suspicions, but solid evidence that can be shared with the publicpreferably before the war, but at the very least after itfor why the action is appropriate. Those criteria have not been justified. One recalls Bismarck's remark in similar circumstances when he referred to the pre-emptive approach as being rather like committing suicide because of the fear of death. There are very serious consequences when starting a war in such circumstances, but they do not seem to have been taken into account.

Bob Russell: I appreciate that the right hon. and learned Gentleman was not a Member at the time, but will he confirm that the official view of the Conservative party was to support the Iraq war?

Malcolm Rifkind: Yes, the hon. Gentleman is correct. Although that is not my view, it was the official view. However, even my right hon. and hon. Friends had reason to assume that the Prime Minister knew what he was talking about when he said that there was conclusive evidence of weapons of mass destruction and other threats, but that has been seen to be completely bogus.
	One should go to war only in one of three circumstances: because one has been attacked, as we were in the Falklands; because one has a treaty obligation to another country, as was the case in 1939 when Poland was invaded; or in very rare circumstances when there is great international consensus, preferably, although not exclusively, expressed through the United Nations Security Council. Such circumstances arose at the time of the first Gulf war when we were able to put together a massive coalition.
	I do not say that the United Nations must automatically give its approval. Nye Bevan, of all people, once said:
	If there is one thing worse than my country right or wrong it is the United Nations right or wrong.
	Of course, the United Nations is a fallible institution that is dependent on the will of its individual member states. However, we have gone to war at enormous cost to the Exchequer and more than 30,000 people have died, but we were not attacked, we were under no treaty obligation and there was not the proper degree of international legitimacy.
	Now where do we go from here? I am conscious of the fact that we must look to the future if we are to reduce the huge burden, in terms of both manpower and cost. I do not argue that we should pull out right away because I was against the war. Indeed, in some respects, the opposite applies and I think that, having created this mess, we have a moral obligation to do our best to sort it out. But I have to say that the criterion that has to be applied is whether the continuing presence of British and US troops is making a useful and viable contribution, not only to today and tomorrow but to the eventual stability of that unhappy country.
	There is a fundamental flaw in one aspect of the approach by the British and US Governments. The Secretary of State for Defence confirmed recently that the approach was gradually to hand over to the Iraqi national forces, the police and the army, and then withdraw our troops. In that way, it is hoped, everything will be for the best in the best of all possible worlds. In a normal situation in which one is assisting a Government who are fighting an insurgency, that would be a logical approach. The more the national Government increase their authority and the more they train their own army and police, the more they can be expected to deal with the insurgency themselves. But in the case of Iraq at this moment, that argument misses a fundamental consideration. This is not just an insurgency: it is an increasingly sectarian battle. There are three communitiesSunni, Shi'a and Kurdall of whom have different interests and none of whom is committed to the concept of a single Iraq. The army and the police force in Iraq are also overwhelmingly Shi'a and Kurd. Therefore, the more powerful the police and the army become in Iraq, the less they are seen as safeguards by the Sunni minority and the more they are seen as an increasing threat to their interests. That is the fundamental inconsistency and why people are increasingly saying that there is no military solution to the problem. The solution, if there is one, has to be found in political terms, not in military terms.
	I said that the situation in Iraq was the worst disaster for Britain since Suez, but it is the worst geopolitical problem for the US since Vietnamindeed, including Vietnam, which already had an insurgency. Vietnam was already involved in a civil war before the Americans ever arrived. The Americans were trying to stop that civil war in the interests of the then Government in Saigon. The current crisis is entirely of our own making, and so far we have had five horsemen of the apocalypse. First, more than 35,000 peopleIraqis, Americans, British and othershave died. According to Mr. Allawi, some 50 or 60 more are killed every day. Secondly, we have in Baghdad, the most pro-Iranian Government that Iraq has had for 70 years, which was not one of the prime objectives of US foreign policy. Thirdly, the situation in Iraq is deeply Islamist rather than secularist. Saddam Hussein was a ghastly, vicious tyrant, but he was a secular tyrant. The current situation was no part of the American strategic objective. Fourthly, on terrorism, we have within Iraqbe it for al-Qaeda or other organisationsthe greatest recruiting territory for terrorism since the Soviets invaded Afghanistan. Finally, we have the drift into civil war.
	I noticed that the Secretary of State for Defence said last week that civil war was not inevitable or imminentan important choice of words. He did not say that it was unlikely. He said that it was not happening today, and it was not certain that it would happen tomorrow. But he knows as well as I do that the facts increasingly suggest otherwise. Indeed, the former Iraqi Prime Minister has said that the situation has already reached the point of civil war, and it is difficult to disprove that argument.
	So where do we go from here? I have said that it looks increasingly as if there is no military solution. British troops are doing a fabulous job, but they will not sort out the insurgency in the foreseeable future, and we all know that. The problem is that our Prime Minister and the President of the United States are in denial. It is almost impossible to imagine a combination of circumstances that would now persuade either to acknowledge that it was all a terrible mistake. Whatever happens, they say that it is all part of the great plan, that everything is getting better and that we should just trust them. But the world does not trust them and nor should it.
	A political solution is required with, first, a more convincing form of power-sharing in Iraq, recognising that Sunni fears and concerns cannot be met simply by a 20 per cent. formulaic share in the structure of government. We went through that process in Northern Ireland, where eventually, after many painful years, we realised that power-sharing had to mean precisely that in a substantive sense, if it was gradually to resolve the kind of problems that we all want to address. Power-sharing has to have substance, not form.
	Secondly, the United States and the United Kingdom have to appreciate gradually that, although their withdrawal from Iraq will cause serious problems for the Iraqi Government, it will also remove one of the recruiting agents for those who are creating the insurgency. Arab Governments in the region must do far more than they have done until now to be part of the process of rebuilding Iraq and assisting the work of the democratic Iraqi Government.
	Finally, although we all want a democratic Iraq, that will work only if a President Putin-type figure is in charge of Iraq. I am no fan of Vladimir Putin; some of the things that he has done in Russia have been very bad, but he took over at a period of great instability and fragmentation in Russia, and one of the reasons why he has become so popular with the Russian peopleeven if not with the rest of usis that he created a sense of stability and authority. If Iraq could identify an individual who could be given that sort of presidential power, he would not be a dictator in the Saddam sense, although he might be more authoritarian than we or the United States would like.
	That kind of political approach is the last chance for preventing the disintegration of Iraq. Without it, British troops will either be sucked in for an increasingly desperate period or they, and we, will have to conclude that it is approaching the hour when they will have to be brought home.

Dai Havard: First, I want to talk about the reasons for the debate. As a member of the Defence Committee, I think that Parliament needs to be involved in such processes. Doubtless, the Minister will find some of our proceedings uncomfortable and may tell me in the Tea Room that we have given a platform for tenuous and sometimes gratuitous general comments about Iraq and Afghanistan, rather than the main issue. But my answer to that is that Parliament needs to be involved, so that it can ventilate the issues.
	Although I share much of the assessment made by my hon. Friend the Member for Leyton and Wanstead (Harry Cohen) of how wrongly things have been done in Iraq, they are not being done wrongly by the British. I am not in control of that Iraqi money. I cannot spend it; other people are doing that. My hon. Friend raised interesting questions, but we are talking about the money that we spend and give. That is under our control, which is why we need to discuss it. We might consider how others could do things better, but we also need to be clear about our own position. That is what we should debatenot how other people spend their money. It is tempting to give a spanking to the argument about elected dictatorships, but I shall not go into that.
	The money that is being spent is supporting our troopspeople who are trying to do a job. I have heard no one say that they do not want to spend that money. There may be arguments on the margins that the amount should be a little more, but the Defence Committee says that we need to support our people in their job. The money is being spent, and there are important arguments about how it is spent and about accountability, but we must be clear about the fact that we are supporting people on the ground.
	I have visited Iraq and Afghanistan, sometimes in uniformwith the armed forces parliamentary scheme, so the House need not panicand sometimes not. Talking to people on the streetif we can actually get on to the streetor talking to a couple of young men on the back of a donkey cart, we hear a different story. Of course, there is ambivalence about our being in Iraq, what we are doing and so on, but when we witness the day-to-day relationship of our forces with people in both Iraq and Afghanistan, it is not as it is often described.
	Our forces want support at their elbow to do their job properly. Their motivation is clear. They are frustrated about obvious things such as being able to phone home, boots and all the usual stuff, but what they really want are the tools to do the job. Part of their frustration is about being able to engage in the civil-military interface, to provide appropriate support for civilians and the proper agencies of an emerging Government and other agencies. The people I spoke to have their own concerns, which include airlift capacity, armoured vehicles and their own protection and equipment, and they are right to raise those matters. They want a manoeuvre capability: they want to be able to get to where they need to go quickly, to be able to do the job, to be protected and to protect others, and to get away, and they need the equipment to do that.
	I shall concentrate my comments on how we spend our money. A lot of concern has, rightly, been expressed about equipment. The report's comments on accelerated capital investment and spending are interesting, because that relates to the capacity to repair, supply, provide, maintain and deliver the equipment that people require to do the job. I am worried that, although we have known for some time that there are problems in some of those areas and although we have continuing conflicts in two places, we have not been able to predict requirements. The Minister has had the opportunity to do this, so he knows that ordinary people doing the job on the ground will say that that is the problem: they need more certainty and better planning. The fact that there are not enough Warrior armoured vehiclesthat is what is claimedand that there are problems maintaining and supplying them should now be able to be predicted because the problems were identified some time ago.

Mark Lancaster: The hon. Gentleman is making a powerful argument that what matters is not how much money is spent, but when it is spent. Page 7 of the Defence Committee report explains away the large capital investment for urgent operational requirements by referring to the purchase of, for example, force protection equipment. Given that the technology used in improvised explosive devicesshaped chargeshas been around since the second world war and was used in Bosnia and Kosovo, why was the money to protect against that threat not spent at the start, when probably half the amount that is having to be spent now would have been required?

Dai Havard: As I am not responsible for that matter, I cannot answer the hon. Gentleman's question, but I know that he has an interest in Kinetic activities of various sorts. He is right to identify the problem. Work is going on. I am saying merely that, although the right thing is being done, because of the way it is presented to us, it appears to be a bit rushed and being done a little too late. I do not think that that is true in some respects, but that is how it appears to us because of the way in which the finances are presented to us. I want to be confident that that is not happening; that is part of the reason why the Committee has asked for a more regular mechanism whereby what is actually being done is made visible.

Brian Jenkins: Does my hon. Friend, like me, believe that the MOD sends a blank cheque to the Treasury and asks for it to be signed, or does he believe that there is a list of operational requirements with moneys attached? Does he agree that it would be to the benefit of accountability if the Committee received that list after it was approved by the Treasury, so that we could then scrutinise it?

Dai Havard: Yes, there are mechanical processes that we could put in place that would facilitate better understanding, not only on the part of the Committee, but on the part of everyone who signs up to the estimatesthe whole House on behalf of the whole population. That suggestion might be worth considering but no doubt there are others. I am not a management accountant or a policy wonkI do not understand how some of those processes work and, to be frank, I do not want to, but I am sure that the pointy heads in the Treasury could come up with processes that would do that for us. The political aspect is what is importantif we have visibility and transparency, we might get better-quality decision making because we have a better understanding of the issues. To be frank, some people do not understand the issues of timely supply and what is actually happening as clearly as they should.
	Let me return to my arguments about capital and, more importantly, repair and provision of equipment. I was pleased by last Thursday's decision about the Army Base Repair Organisation, although there has been an understanding about that for some time. However, I want to see figures on spending on urgent requirements and on capital depreciation of assets. I want to be confident about how existing assets will be maintained and their life perhaps extended. I want those things to be made clear. It is clear from that decision that we know that we need more armoured vehicles and that we need a better supply. The methods that are currently used are not wrong, but different methods are available. There is a relationship between all those things, and the Select Committee is working on a report on defence industrial strategy. We have a clear defence industrial policy, including a force generation process that assesses the number of people required against a set of defence assumptions. Perhaps we should have better individual debates about each of those matters but, more importantly, they relate to the industrial strategy for delivery which, in turn, is related to the way in which the money flows.
	Those interrelationships are not clearly understood or debated properly in the House, so it is important to ventilate them. Partnering arrangements under a defence industrial strategy are probably a good idea for some things, but not for others. There are certain things that one needs to supply at certain times and that, frankly, one does not wish to subject to competition. ABRO has the capability to maintain armoured vehicleswhether that will be true for the new fleet is a different matter. Some estimates and decisions about when money can be spent and acquired are related to those decisions.
	On the surface, I am asking a simple question about the regular supply of information but, in fact, the Committee and I are asking a very difficult question. Realistically, the answer is to provide a more joined-up process, because planning assumptions and so on depend on how the money is spent. It is not easy for the Ministry of Defence to do so, but it is vital to make those processes visible so that we achieve a better quality of understanding and, consequently, a better quality of debate. Doubtless, my right hon. Friend the Minister will be upset with me, and will have a bit of a row with me later but, although it may not feel like it, I am ally of his in this debate. At the end of the day, it is important that we show and demonstrate our own democracy at work. It is all very well for me to go on to the streets in Afghanistan and talk to ordinary Afghans about building capacity to provide a democratic process, but we must demonstrate such things in our own democratic process. In Iraq and Afghanistan, people said to me, You come from the mother of Parliaments, so you know it all. Just tell us what to do. I said, If I did know it all, I would be a dangerous man, and if I tried to tell you I would be even more dangerous. You have to develop it for yourself. One of the best ways in which we can help them to do so is to demonstrate that our processes are open and are seen to be open.
	The debate is not just for our benefit. We need to send a message of support to our people in each theatre, whether they belong to the military, other Government Departments, the police service or other bodies that are helping to develop capacity. Money has, in fact, been provided. Our discussion is about the methodology that we should use to hold that debate properly and give those people confidence that we will maintain that funding for them. We should give similar confidence to the people of both those countries whom we claim that we are trying to help. That should be our motivation. I am not interested in what is said about the whys and wherefores of entering one conflict or another, or whether Mr. Bremer should have worn boots with his suit. We should make certain that we send the right message. May I tell my right hon. Friend that, although it may not feel like it, I am on his side?

Adam Holloway: The report by the Select Committee on Defence states:
	Telling Parliament that the costs of the deployment to Afghanistan is 'around a billion' is just not good enough. This is a very large amount of . . . money, and the public deserve better information on how it is going to be spent.
	Costs are imprecise, because we do not know precisely what they will be. We are told that the aims are, first, to deal with instability, to extend the writ of the Afghan Government, not to allow Afghanistan to fail, to support the Afghan national army and police and to gain the good will of the Afghan people. Those are great aims, given the consequences of actions in Afghanistan that led to the events of September 2001. Secondly, as part of that we are there to assist the Afghan authorities in reducing the supply of drugs. About 90 per cent. of the heroin on the streets of my constituencyGraveshamcomes from Afghanistan and about a quarter of those drugs come from Helmand province, where our troops will be deployed.
	To my mind, however, those twin aimsstabilisation and the reduction in the supply of the opium poppyare in conflict with each other. How do we gain the good will of people in Helmand province when a very large number of them are dependent on growing poppies, not as a great money-making adventure, but as a substance crop that they grow to feed their families? I have spoken to Afghan farmers who say that if we seek to interfere with their livelihoods and do not provide sufficient alternative means of income, they will take up arms against us.
	We are told that military operations will be against the greedy, not the needy, and that the involvement of the British military will be confined to
	cordons, airlift of Afghan National Army and Police units, and help with planning.
	To my mind, the consequences will generate anything but the good will of the local people. Last week, at ameeting at Permanent Joint Headquarters in Northwood, jokes were being made about whether, as a consequence of that conflict in aims, British troops would become the duty targets.
	I and every person who is associated with planning for the deployment to whom I have spoken at the MOD and the Foreign and Commonwealth Office believe that the reason why the estimates of cost are so vague is precisely that we have no clear idea of the consequences of what we are proposing to do.

Tobias Ellwood: I am grateful to the House for allowing me to participate in this important debate. As my right hon. and learned Friend the Member for Kensington and Chelsea (Sir Malcolm Rifkind) has said, this is one of our first opportunities to assess some of the spending commitments that have taken place not only this year, but in the past few years. I take issue with some of the concerns that have been raised by Government Members that, somehow, we are involved in a process of simply ticking off the accounts. We must go further than simply looking at the financial aspectsthe numbersto the decisions that lie behind them. Were those decisions correct? Could the objectives have been achieved quicker or cheaper if other decisions had been made instead?
	Today, as I am sure all hon. Members are aware, is the third anniversary of the invasion of Iraq. This is an appropriate time to take stock of what has happened in that countrya moment to consider what has been achieved or not achievedand to measure the social and political progress that has been made. There are more than 200 UK dead. More than 2,300 American soldiers have been killed. More than 4,000 British soldiers have been injured.
	We now know that there were no weapons of mass destruction, no missiles with 45-minute readiness and certainly no links between Saddam Hussein and al-Qaeda. In my view, it was a mistake to ignore the calls for a broader coalition to deal with Saddam Hussein. It was a mistake to disband the Iraqi military. Certainly, it was a mistake to try to link 9/11 with what was going on in Iraq. In my view, the invasion of Iraq, with the objective of helping to defeat terrorism, has only encouraged more terrorism and made the world a more unsafe place. Today's debate is about the sums involved, but those poor decisions have driven up the cost of our operations.
	I do not argue about whether Saddam Hussein had to be dealt with, but as someone who has spent many years in the militaryserving not only in Kuwait, but in Bosnia and other placesI have questions about the manner in which we went about getting rid of him. The inadequate assessment of the initial threat, the poor justification for an attack and the appalling management of peacekeeping have all led to the rising costs that we are debating today.
	We heard only last week that 800 troops will be removed from the British forces in Iraq. The suggestion is that we are doing well and achieving our objective, but Iraq is in a very poor condition. Three months after the elections, there is still no proper Government. On average, electricity is available in Baghdad for only four hours every day, and there is no adequate water supply or sewage systemafter the Americans have spent about $20 billion on the infrastructure.

Kevan Jones: I know that the hon. Gentleman was not in the House when the decision was taken to invade Iraq, but as someone who has been to Iraq four times, including a week ago, may I ask him not to take as gospel everything that he reads in the newspapers? Clearly, the situation in the south and the north is very different from that in and around Baghdad. I do not recognise his description as applying to southern Iraq. In the south, effective regional and local government have been working for two or three years.

Tobias Ellwood: The hon. Gentleman makes a valid point, but Basra is working in isolation from Baghdad. There is no link or co-ordination with national Government. I shall suggest a possible solution, if the hon. Gentleman will bear with me.

Harry Cohen: Is it not also the case that the democratically elected authorities are working in isolation from the British forces?

Tobias Ellwood: The hon. Gentleman contradicts the point made by his hon. Friend the Member for North Durham (Mr. Jones).
	The term civil war is being mentioned more and more. We have been encouraged by Ministers not to talk about it, yet that is what we are heading towards. We should debate it in the House. What would be the financial consequences for our involvement in Iraq? The elections there were a positive step forward, but they galvanised the parties and the electorate along religious lines and into their ethnic groups. Consequently, the new National Assembly is unable to agree on a Prime Minister and fill the political vacuum. Granted, in certain areas, initiatives have been taken, but in Basra and other places political power rests not just with the local councils, but with the militias. They have taken advantage of the political vacuum. People seek refuge with the militias in Basra and in many major towns because they are scared and do not feel they are being looked after by the official authorities. The British Government say there is no civil war, yet 1,300 civilians were killed last month alone. There are 60 attacks a day, on average, and about 30 bodies are found on the streets every day in Baghdad. How high must the daily death toll rise before the Minister acknowledges that Iraq is in a state of civil war?
	The Minister spoke about contingency planning. I should like to know what will happen if the current plan is not adhered to. A comparison can be made with Bosnia and what happened in that countrythree distinct ethnic groups, opinions and differences suppressed by a dictator whose authority was strengthened by outside threats, and when the dictator was removed, the lid came off, opinions could be expressed and the result was civil war.
	I have said previously in the Chamber that there is another possible solution to the situation in Iraq that we have not considered or put to the people of Iraqthat is, the managed partition of Iraq. It already exists. The hon. Member for North Durham says he has visited Iraq. If he has visited the Kurds in the north, he will know that they have their own Prime Minister. They even have their own airline. They are entirely segregated from the rest of Iraq and they have no intention of developing any stronger ties. They are quite happy to run their own affairs.
	The Yugoslav model that we are trying to promote should be abandoned in favour of the Czechoslovakian model. Some form of velvet revolution should be promoted to allow segregation and the development of regional areas, including Basra.

Dai Havard: I understand the hon. Gentleman's argument and I do not doubt that his motives are good, but do not the things that he proposesa velvet revolution and managed partitionpre-suppose a level of control and security that do not exist? How can those be brought about without first providing a secure environment in which such a political debate can properly take place?

Tobias Ellwood: It is not for me to decide anything. That is for the Iraqi people to decide. When I put the argument to the Minister before, he found it amusing and suggested that I was some kind of imperialist who wanted to go in and sort out Iraq's problems. He might remember the debate, and he knew perfectly well that that is not what I was pushing for. It is something that the Iraqis need to decide, but the option that I have mentioned has not been debated to the full. If we speak to the Kurds, Shi'ites and Sunnis, we find that it is an option that has not been pursued. It provides the blueprint for another solution, other than the civil war towards which we are now heading.

Dai Havard: rose

Tobias Ellwood: If the hon. Gentleman will make it brief, I shall be happy to give way.

Dai Havard: The Iraqi people voted to maintain their country within its current borders. They did not vote in the last election for the partition that the hon. Gentleman describes.

Tobias Ellwood: First, the Kurds were never asked. If we look at the constitution, we see that the regions are given an awful lot of autonomy. I am suggesting that that needs to be developed even further and that, where there is no segregation, exactly what happened in Bosnia will occur. If we remove the troops or money that are going into Bosnia, I am sorry to say that the area would be likely to return to civil war. I believe that to stick blindly to the initial plans created many years ago, having learned what we now know and when they are obviously failing, is to risk the efforts and, indeed, the funding that we have put in, as other countries have done, including Iraq.
	I should like to finish on Afghanistan, which I had the opportunity to visit a couple of months back, and refer to the report of my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot) and the Select Committee on Defence. Page 11, paragraph 18 states:
	MoD has stated that the estimated cost of the UK's deployments to Afghanistan will be 1 billion
	over the next five years. It goes on to state:
	We asked for a breakdown of this cost by financial year and by purpose.
	I think that the response was wanting. I put it to the Minister that this House deserves more detail than simply saying, We would like a cheque for 1 billion over the next five years. Where will the money go, how will it be spent, where will it be invested and how will it help Afghanistan?
	There has been a US-led counter-insurgency operation on the one hand and NATO operations on the other. The two are not working together. There are completely different lines of responsibility. Now that we have moved into south-west Afghanistan, we have already seen evidence of mission creep. We are in the Helmand area, but no sooner did the Norwegians in the north get themselves into a spot of trouble than the British, who are supposed to be based in the south-west, were airlifted north to bail them out of trouble. There is nothing wrong with thatit is exactly how things should workbut straight away, we are seen as a rapid reaction force for the whole of Afghanistan. If that is the case, fine, but it should be stipulated and made clear. Those involved should not say that we are in charge of one region and then provide extra tasks.
	Are there enough troops in Afghanistan to do the job? We all want to support our troops, but we have sent 5,000 into southern Afghanistan to patrol and look after an area twice the size of Wales and somehow deal with the narcotics production and terrorism that are taking place there. That is wholly inadequate for what we are trying to achieve, and it is another example of how mission creep will play into the situation.
	My time is running out and I appreciate that others want to speak. There are an awful lot of answers here, however, and I encourage the MOD, Ministers and so on to reconsider what our true objective is in Iraq and to clarify what we are doing in Afghanistan, for the benefit not only of those of us here who are dealing with the finances, but of the troops on the ground.

Bob Russell: I congratulate the right hon. and learned Member for Kensington and Chelsea (Sir Malcolm Rifkind) on an excellent speech in which he encapsulated the past, present and possible future. It is a pity that he was not in the House when the Iraq debate was going on, because he might have influenced some Opposition Members.
	May I ask the hon. Member for Leyton and Wanstead (Harry Cohen), in maintaining his consistency in criticising his Government's adventure in Iraq, nevertheless to pay tribute to the British troops, who are doing a fantastic job? If he could offer just one or two sentences in praise of our troops, he would go some way towards those who may think that he is being critical of them.

Harry Cohen: I thank the hon. Gentleman for giving me the opportunity to do just that: when I was a member of the Defence Committee, I spent a lot of time praising British troops. When British troops are given a rotten job, the failure is not theirs but that of President Bush and others.

Bob Russell: I am grateful to the hon. Gentleman for clarifying his position so eloquently. I congratulate the Chairman of the Defence Committee, which will take away from today's debate one or two points that I shall come to shortly, on his presentation.
	I represent the garrison town of Colchester with great pride and affection, and 2 Para is in Iraq, while 3 Para will shortly go to Afghanistan. When 2 Para returns from Iraq, the 2nd Battalion the Royal Anglian Regiment, which is the regional regiment for our part of the country, will go out there, so I have more than a passing interest in what happens to British troops in Iraq and Afghanistan. Just a week or so ago, I had the privilege of travelling with the Committee considering the Armed Forces Bill to Iraq. The Minister knows this, but I am proud to say that the morale of soldiers, sailors and Air Force personnel is great. I have pride and affection for those young men and womenthe number of young ladies is increasingand for the officers.
	Sadly, the Committee arrived in Iraq soon after two members of 2 Para lost their lives. I pay tribute to them and to last night's BBC Panorama programme, which provided a balanced account of what British troops are doing in Iraq: helping to bring that country up to thedemocratic standards and civilisation that this Government feel should be provided there. I say that as somebody who voted against the war, because we are not here tonight to discuss why we are there: we are there, and it is our duty to remain there and try to help the Iraqi people.

Jeremy Corbyn: I acknowledge the points that the hon. Gentleman is making, but does he accept that many families of soldiers who have tragically been killed in Iraq and others in the services community have serious doubts about the strategy and take part in anti-war meetings because they think that British troops should be withdrawn?

Bob Russell: I acknowledge the hon. Gentleman's point, but, as I said, we have a duty and responsibility to remain for as long as the Iraqi Government wish us to remain. People who join Her Majesty's armed forces do so in the knowledge that they could be deployed to parts of the world to which they may not want to go, but that is a reality of life. The Panorama programme was poignant, because within an hour of an officer being interviewed, that officer and a young private, who also appeared in camera, were tragically killed. The BBC's presentation vividly brought home what is going on.
	Others have discussed the broader picture, but I shall concentrate on some relatively minor matters that are nevertheless important in the totality of events. I hope that the Defence Committee will consider the Army Base Repair Organisation. In the space of three months, the Ministry of Defence has gone from proposing large-scale cuts in ABRO to last week's welcome announcement that the job losses will be fewer than originally proposed. My concern is that some MOD boffins concluded three or four months ago that ABRO should be reduced in size, but on reflection concluded that that was not such a bright idea. It may well be that some of the work that ABRO does could be privatised and put out to privatised contractors, but that would take away the dedication, consistency and continuity of a skilled work force who live and breathe the Army just as much as anybody in uniform. I sincerely hope that the MOD will think again, even on the job losses that it is still going ahead with, and I hope that the Defence Committee will consider the whole scenario.

Adam Ingram: It is worth while the hon. Gentleman reflecting on the fact that 5 per cent. of what ABRO does is already obtained from the commercial sector. We are trying to grow that and to give ABRO's work force, wherever they are located, the best possible opportunity in terms of that future. We are some years away from doing what he suggests.

Bob Russell: I thank the Minister for that. Nevertheless, last time I went to the ABRO workshops in Colchester, I saw vehicles having desert camouflage applied, which is not usual for the Colchester garrison area. I assume that there must be a link there.
	I should like the Defence Committee to look back at the closure of the clothing and textile research laboratory in Colchester, which will undergo its final death throes in Oxfordshire next week. The world's leading research establishment is being destroyed. I mention that because, when I visited Iraq, personnel raised with me two issues that are small in the grand scale of things but important for the day-to-day well-being of our troops: first, the fatigues with which they are issued are not necessarily the best for a desert climate; secondly, the mattresses with which they were issued have plastic covers. I am not an expert, but I know that, in a hot climate, plastic covers on mattresses are not the best option. Moreover, I have slept in youth hostels and scout huts that are better than some of the accommodation that our young men and women are expected to occupy. These are not temporary camps but have been there for three years.

Kevan Jones: On the rubber mattresses that the hon. Gentleman mentions, does he accept that the commanding officer knew nothing about that and put it right as soon as it was raised by members of the Committee?

Bob Russell: That proves the power of an all-party delegation to get things sorted just like that.
	Something must be done about the transportation of our young men and women back to the UK from Iraq. I cannot speak about Afghanistan because I have not been there, although I hope that the invitation is in the post. A memory that will always stay with me from when we boarded the plane is the sea of faces with people all wearing battle fatigues and looking forward to their return to the UK for one week, two weeks or whatever it was. This was on a chartered holiday flight. That might be all right for a two-hour flight from Gatwick down to Tenerife, but cramming that number of our young men and women into a plane where legroom is at a premium for an eight-hour flight is not the right way to treat them.

Kevan Jones: Does the hon. Gentleman agree that it was made worse for the poor individual who had to sit next to him all the way back from Qatar?

Bob Russell: I do not recognise that insult. I am trying to make a serious point. I ask the MOD to consider whether the air transport that it is supplying is appropriate for that number of people over that distance and time.
	The entire Committee was immensely proud of our troops. The reason for our presence in Iraq is an issue for another day, but what we saw was impressive and I hope that all hon. Members, irrespective of their views on the Iraq war, will join me in thanking all those young men and women for the marvellous job that they are doing.

Crispin Blunt: It is always a pleasure to follow the hon. Member for Colchester (Bob Russell). He says that the reason for our presence in Iraq is an issue for another day. That did not stop him making an ill-starred intervention on my right hon. and learned Friend the Member for Kensington and Chelsea (Sir Malcolm Rifkind), who was against the war.
	I support the brief but authoritative speech of my hon. Friend the Member for Gravesham (Mr. Holloway) on Afghanistan. I shall revert to that in the latter part of my contribution.
	My hon. Friend the Member for Bournemouth, East (Mr. Ellwood) said that linking 9/11 and operations in Iraq was a mistake. It was not a mistake but a deceit, and that is part of the problem. The leaders of the United States and the United Kingdom, who took us into the conflict, perpetrated several other deceits, but that first deceit, most of all, has caused the enormous problems for the liberal west in the whole region.
	My right hon. and learned Friend the Member for Kensington and Chelsea made an important and properly learned contribution on Iraq. He reminded me of the view that I took in 2004 when I served on the Select Committee on Defence. On my visit to Iraq, I learned that British and American forces were, even then, as much part of the problem as the solution. If that was the case then, how much more is it the case now, two years on? Our challenge is reconciling an exit from Iraq and trying to sustain the stability of the Iraqi Government, their democratic institutions and the institutions that we are putting in place, with the Iraqi people's perception of us as the occupying powers.
	I am not yet satisfied that the penny has dropped with United States forces, or that the rather alarming account of former SAS Trooper Griffin in The Sunday Telegraph last weekend does not continue to represent the mode of operations by United States forces in Iraq. Operating as an occupying force, as though killing Iraqis in Iraq was defending the front line of the United States, sadly appeared to be the rule, not the exception. Former SAS Trooper Griffin's view was that officers who took a different line on their relationship with the Iraqi population were the exception, although there were honourable exceptions.
	That account of British forces on joint operations should give us all significant pause for thought. I look forward to the Minister's comments about whether the style of American operations has started to change, giving the Iraqi people the chance of perceiving Americans differently when they leave.

Kevan Jones: I have had previous discussions with the hon. Gentleman about his views on Iraq. Had he not already written an article for a national newspaper outlining all that he has said in the debate before he set foot in Iraq in 2004? Is not it true that his comments are not based on what he has seen on the ground but his prejudices, which existed before he went? The newspaper article appeared on the Wednesday that we were in Iraq.

Crispin Blunt: The hon. Gentleman is correct about the timing and I am happy to say that what I saw on the ground confirmed my previous assessment. An isolated visit to British troops in heavily restricted conditions in Basra should not take one's eyes off the wider strategic position of taking in all the information from the whole country of Iraq. He saw what I saw on that visit, as we travelled round Basra in the back of armoured vehicles. That was when the situation in Basra was relatively benign, before the threat of improvised explosive devices had become as bad as it is today. I suggest that my article might bear his re-examination.

Jeremy Corbyn: Does the hon. Gentleman acknowledge that the removal by the United States of people, particularly from Afghanistan, to Guantanamo Bay and their treatment there are major causes of unrest throughout the region, especially in Iraq and Afghanistan? Does he agree that the only way forward is the immediate closure of Guantanamo Bay and the immediate acceptance of the role of the International Criminal Court and of international law in general, of which the United States seems to be completely ignorant?

Crispin Blunt: rose

Mr. Deputy Speaker: Order. The hon. Member for Reigate (Mr. Blunt) will obviously answer that intervention in his own way, but I do not think that we should widen the debate too much.

Crispin Blunt: I am grateful for your guidance, Mr. Deputy Speaker. The answer to the hon. Gentleman is that I agree with him. There are many major causes of anger against American and British interests, and, sadly, Guantanamo Bay is only one of them. It is just one cause of our problems.

Tobias Ellwood: Will my hon. Friend give way?

Crispin Blunt: If my hon. Friend will forgive me, I would like to finish my remarks, but if I have time to spare, I will of course give way to him.
	My hon. Friend the Member for Gravesham dealt with Afghanistan briefly but with considerable authority. The fact that he has received accounts that people at Permanent Joint Headquarters are now referring to the British forces going to Afghanistan as the duty targets gives some indication of the depth of concern and perhaps cynicism about the likely success of that operation.
	The estimates that we are considering today are extremely vague, as the Defence Committee pointed out. They refer to 1 billion here or there over three years, for example. The money is vague because the role and the mission are alarmingly vague. There is broad consensus that we are not sending enough troops to deliver the mission that they have been invited to undertake, but the force is also too large to extract easily. My worry is that, as the Americans downscale their operations in Afghanistan, the United Kingdom could be left holding the Afghan baby. The history of Afghanistan for foreign forces is an extremely unhappy one. The Afghan population will not easily be able to differentiate between the Britishwith our long history of association with Afghanistan, the rules of engagement that apply to our forces and the restraints that we place on themand the Russians, the Americans and perhaps the British of the 19th century. We will all be lumped together in the same category by the Afghan people.
	The hon. Member for Merthyr Tydfil (Mr. Havard) spoke of the importance to the soldiers on the ground of civil-military relations, but chose not to dilate on the state of civil-military relations likely to be faced by our troops during their operations in Afghanistan. Our forces are being invited to destroy the method by which most Afghan people earn their money. That method is, admittedly, unacceptable to us, given the huge danger to our constituents and our country, as well as to the whole of Europe, represented by the heroin emanating from Afghanistan. However, if we destroy the Afghan people's main income earner, they are unlikely to be too pleased with our presence, and we shall not easily be able to establish good civil-military relations there. I am worried that our troops will quickly end up behind armour, having to defend themselves from attacks not only from those who are already hostile to us, but from those whom we are about to make hostile. In that sense, we will never be able to achieve during forthcoming operations in Afghanistan, on any basis, the civil-military relations about which the hon. Member for Merthyr Tydfil was talking.

Dai Havard: Actually, I am the Member for Merthyr Tydfil and Rhymney. The hon. Gentleman had better not forget Rhymney, or the people there will be over the hill with blue faces and pointed sticks. Tribalism is something that I know about.
	I was not dodging the issue and would be only too happy to debate it with the hon. Gentleman. He is right that it is the key to the whole exercise and I hope that the interdepartmental drug unit and the joined-up approach between various Departments will address some of that. The task is not solely militaryin that sense, he is correctand those relationships are one of the issues that the Defence Committee is considering. He will understand and, I hope, agree that the Afghan people wish to see such relationships, as all the polling suggests.

Crispin Blunt: The hon. Member for Rhymney as well as Merthyr Tydfil has taken a quarter of the time remaining for my speech. I am not the only one concerned about the change in nature of the Afghan people's view of foreign forces. In May 2005, following reports of abuse of Afghan detainees by American forces, the President of Afghanistan said that he feared that popular resentment was building against the international military presence and the Americans in particular. It will be difficult for the Afghan people to differentiate the Americans and us. I saw that the British general in Iraq who was interviewed on Panorama the other day was wearing American stars on his uniform. In one sense, I have always been a supporter of inter-operability and operating together, but if our soldiers are putting that on their uniforms so that the Americans know that we are on their side, ordinary Afghan people might be forgiven a greater degree of confusion.
	I commend to the House the brief and authoritative speech by my hon. Friend the Member for Gravesham, who has considerable knowledge and expertise in this area. I look forward to the report of the Defence Committee on the deployment to Afghanistan. It is extremely important that Members who have knowledge of the scale of the task for the soldiers whom we are sending to Afghanistan warn the House and, through the House, the country at large, of the difficulties that they will face. The House can then come to proper conclusions about the resources that they will require to carry out the role that we have invited them to perform, or whether they should carry out that role at all.

Julian Lewis: When I first entered the House in 1997, it was not long before the bright, shiny new Labour Government came out with a bright, shiny new Labour foreign policy. That foreign policy was to be an ethical foreign policy. We do not hear too much about that these days, not because we think that our foreign policy is not ethical, but because the experience of office has shown the Government that foreign policy and, by association, defence policy, is often not a matter of positive ethics but of deciding which is the lesser of two evils.
	That has been illustrated by a number of speeches today, not least that of my hon. Friend the Member for Reigate (Mr. Blunt), comparing the differing objectives between wishing to clean up the trade in opium from Afghanistan, and not wishing to forge an alliance between the local farmers who depend on growing opium and the Taliban and other extremists and insurgents who were not normally in any form of prior alliance, but who could be forced into an alliance if we are heavy-handed about achieving the anti-drugs objective. In other words, one must sometimes choose the least worse policy.
	That was also implicit in the speech of my right hon. and learned Friend the Member for Kensington and Chelsea (Sir Malcolm Rifkind) when he said that it looked as if Iraq were ending up with a Government far more pro-Iranian, in terms of the alliance of the two adjacent countries' Governments, than one would ever have wanted. He did not say this explicitly, but I detect an underlying belief that the policy that was followed for years, and subsequently denounced on so many occasionsthe policy of supporting Saddam Husseinwas completely unethical, which it probably was. It is likely, however, that when discussions were held in the Foreign Office in his day, the argument would have been, Yes, but what is the alternativesome sort of axis, nexus or alliance between extremist fundamentalist Governments in adjacent countries? It is not easy to choose between those two evils.
	The point is that a choice between evils must often be made. There is no morally free get out of jail clause that can be invoked by those burdened with the responsibility of deciding on a foreign policy or a defence policy in the modern world, which is peopledas no doubt were the mediaeval and ancient worldsby some very nasty regimes.

Harry Cohen: I am aware that the Conservatives, with some honourable exceptions, voted for the war in Iraq. Does the hon. Gentleman not agree, however, that that was a war of choice? It was very different from the wars that we had fought previously, especially those that preceded the second world war. At the time of those wars we had a defence policy that was a policy of defence: war was a last resort. Is the hon. Gentleman now declaring himself to be in favour of wars of choice? Does that mean that ifGod forbidthe Conservatives ever won an election and the hon. Gentleman arrived on the Government Front Bench, we would be entering into wars of choice throughout the globe?

Julian Lewis: I am sorry that the hon. Gentleman does not seem to have understood my point, which was that the choices we make often have deleterious consequences, whichever horn of the dilemma we choose. We have to choose the least worse alternative. In the case of Iraq, I believe that the person who chose the war was the person who, having previously mounted an unprovoked and bloody invasion of another UN member country, proceeded to ignore injunctions from the international communityand that was Saddam Hussein.
	Saddam Hussein seems to have behaved in a very strange way. If he knew that he did not have weapons of mass destruction, he was certainly sending very unusual and unwise signals to the world. In obstructing the investigations for so long, he was doing all he could to suggest that he had something to hide. I am not at all ashamed of having made the decision that I made to support the war, given the knowledge that we had then. I do not think that the hon. Gentlemanwho of course did not support the wardoes our forces any favours by expecting those of us who did support it to say, We're terribly sorry, we were wrong. Decisions can be made only on the basis of the evidence available at the time, and everything about the way in which Saddam's regime was conducting itself indicated that there was something to hidesomething that we could not take the chance of letting him have.
	I am glad to say that I have, in a way, received an answer to a question asked of me by one of my hon. Friends a few minutes before the debate began. The question was this: given that we would be debating a report on the estimates, to what extent would we be allowed to wander into substantive issues of foreign and defence policy? I am glad that successive occupants of the Chair have allowed that to happen.
	The Government's presentation of a skeletal outline amounts to an opportunity lost. The message conveyed by my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot) and his Select Committee is that there is no earthly reason why the Government, and the Ministry of Defence in particular, should not be a great deal more forthcoming. It has been suggested that one reason for the sketchiness of the information in the estimates is that the Government's vagueness about what policy they will adopt prevents them from being more precise in accounting for the large sums whose expenditure they expect us to approve. As the Committee has pointed out, however, that is given the lie somewhat by repeated indications in correspondence from the Ministry of Defence that in its dealings with the Treasury, the MOD adopts a system very different from that which it adopts in its dealings with the House of Commons.
	If it is possible for the MOD to ensure that the Treasury is updated so regularly as the time when the expenditures take place unravels, why is it not possible for it to ensure that the House of Commons is similarly updated? Is it because of security considerations? I think that my right hon. Friend and his Committee have proved themselves time and again to be capable of being taken into the loop when any confidential material needs to be divulged. It is not necessary to argue that the House of Commons as a whole cannot be trusted with the fine detail; in the Select Committee system we have an apparatus that assuredly can.
	According to the report, the way in which the MOD has been satisfying the Treasury's requirements suggests that it regards Parliament, by contrast, as something of a rubber stamp. The Committee demanded that the MOD recognise that the agreement of the Treasury is not a substitute for parliamentary approval, and that giving the Treasury information is not enough. This is not just a question of the quantity or detail of the information; it is also a question of the format. I was relieved to read on page 11 of the report, in paragraph 19, the sentence:
	The Supplementary Estimates are very hard to understand by any but the most expert reader.
	Amen to that. There was very little in the documents, even after the MOD had had three goes at addressing the problem.
	The Government have not been slow in producing many bulky reports during the years in which I have been in the Houseenough to depopulate more than one rainforest. Why, when it is a question of spending 1 billion at a time, or more, in adjusting the estimates, are we left with documents as small and scrappy as those appended to the report? Page Ev 7 of the report deals with the MOD's second memorandum. Under the heading Capital DELdepartmental expenditure limitswe read:
	The Department's estimate for Capital Expenditure in Request for Resources 2 relates principally to equipment purchased as Urgent Operational Requirements . . . and accelerated capital repair costs on equipment in operational use.
	All that happened was that one line in the original report was broken down into two lines in the second report. The Minister nods. I can only assume that if my right hon. Friend and his Committee had persisted day in day out, and week in week out, in trying to elicit more information, they might have been given a substantive account of what the MOD money would be spent onmore or less in time for the estimates after next.
	More needs to be done, and one wonders why the MOD is not doing it. The suspicion has to be that a civil service Secret Squirrel society mentality leads the Ministry to say, We mustn't tell these MPs too much about how we're spending the money, because if we give them anything to get their teeth into, those teeth may bite. I am sorry to say to the Ministera likeable chap whom I greatly admirethat it is the job of MPs to get their teeth into such issues, and sometimes those teeth will indeed bite. Indeed, they occasionally do so on behalf of the common cause that we like to think we make when important defence issues are at stake.
	My right hon. Friend the Member for North-East Hampshire set the admirable precedent of speaking for only 10 minutes, which is one reason why I am encouraged to be slightly more discursive than I otherwise would have been. Apart from anything else, that showed that he expected all Members present to have read his report, in which everything is set out with great clarity.
	This is my first opportunity to congratulate the hon. Member for North Devon (Nick Harvey) on his new post, and I am genuine in doing so. It is a great privilege to be a defence spokesman for one's party, and I am sure that he will perform that role with great awareness of the responsibilities that it entails. He raised pertinent questions about the long-term financial implications of extended counter-insurgency operations. I was particularly pleased to hear him say robustly that we cannot pull out of these commitments in a hurry, because we do not always hear that in this House. We often hear those who do not like the war, and who wish that we had never gone into these countries, describe the way forward as precipitate withdrawal. But whatever one thinks about the circumstances that led to our entering them, precipitate withdrawal would be a disaster for their peoples.
	The hon. Member for Leyton and Wanstead (Harry Cohen) has shown admirable consistency on this issue before, during and after the war, and in the light of his contribution, we can be sure that anything corrupt ever done by anybody in the United States of America will not escape his attention. However, I was pleased to note that he was, as usual, honest enough to admit that those involved in the examples of corruption and exploitation that he described ended up in jail.
	It is a pity that those who are killing and maiming innocent Iraqisthey claim to be their representatives, but in fact they support the murderous regime that was there beforeare not in jail, or criticised in the manner that our western Governments who are trying to establish a free and democratic system for Iraq are criticised. It is one thing rightly to point out how many people have been killed in Iraq, but it is a sad omission not to point out that many of them are killed in bomb explosions for which the people who claim to be fighting for Iraqi freedom are responsibleand that the latter could not care less who the victims are, so long as they create mayhem and frustrate attempts to reconstruct Iraq.

Harry Cohen: I am afraid that the hon. Gentleman is being much too pious. Through one of its biggest operations in Iraq, the United States is now doing a mass slaughter job. He has also forgotten about other US attacks, such as that on Falluja. I condemn atrocities and killing on all sides; I wish that he would do the same.

Julian Lewis: I can assure the hon. Gentleman that I have barely begun to be pious; I have a lot more piety left in me. In referring to Falluja, he has reminded me of the report that says that after the attack on Falluja, al-Zarqawi was in the hands of American forces but unfortunately was not recognised and was allowed to go free. I am happy to acknowledge that that was a failurebut had he been recognised and not been allowed to go free, that operation would have been justified by his capture alone.
	My right hon. and learned Friend the Member for Kensington and Chelsea spoke with massive authority, and although I do not agree with him on this occasion, it is always an intellectual treat and an object lesson to hear him present his case. I was slightly surprised at the rather strict criteria that he applied to the basis for military interventions. He said that they should happen only when a country is attacked, or where a treaty with another country triggers us to go to war. I was surprised that he did not also mention the newer criterion of humanitarian intervention, although I would not argue that it was cited in the case of Afghanistan or Iraq.

Malcolm Rifkind: I did in fact mention a third consideration that might justify war: when there is a sufficient degree of international support, through the United Nations Security Council or even some other method, to give legitimacy to action that would otherwise not be defensible.

Julian Lewis: That is exactly what my right hon. and learned Friend said, but he did not say that when the country in question is not being attacked or about to be attackedbe it one's own country or a country for which one has responsibilitythere is a newer, more debateable criterion: that a humanitarian disaster is unfolding in that country. I am sure that he had that in mind in outlining his third criterion, but he did not mention it. I make that point because it illustrates that international law is not set in stone; it evolves as time goes on.
	We have to recognise that the threat currently faced by western countries is so irregular and so unmindful of existing laws and conventionsindeed, those responsible for that threat deliberately set out to flout themand so new, involving as it does the existence not only of weapons of mass destruction but of groups who, if they got their hands on those weapons, would unhesitatingly use them, that international law may need reviewing. Those who do not recognise that point presumably argue that in no circumstances should we intervenenot even if the country in question makes the most reckless and bellicose pronouncements, and not even if there is high-grade intelligence suggesting that its Government are about to acquire weapons that could well be passed to groups that would unhesitatingly use them.
	That was the basis on which the Prime Minister convinced the House of Commons that we needed to act, and at that time Ministers had good reason to believe that that was the true situation. I only regret that certain notorious spin doctors were allowed to over-egg the pudding. The lesson of history is that if we are honest with the British people about the limitations and content of our knowledge they will trust us, and that we betray that trust at our peril.

Richard Younger-Ross: I am listening to the hon. Gentleman very closely. He made the case for a pre-emptive strike where there is an imminent threat, but he seemed then to wander away from that, almost implying that a case exists for pre-emptive strikes in general. Does he think that such a case could be made in respect of Iran?

Julian Lewis: What I am saying is that there are conceivable circumstances in which military action might be necessary even if a threat was not imminent, if a country that was not bound by the normal conventions, understandings and value systems of the international community were about to acquire mass destruction weapons. I do not think that, under the existing narrow interpretation of international law, such a situation would count as an imminent threat. I say quite clearly that I believe that there are some circumstances in which some regimes should be prevented from acquiring weapons of mass destruction. I make no apology for saying thatand particularly not to the hon. Gentleman, who came late to the debate, although I was delighted to take his intervention.
	I will conclude my remarks by making a couple of brief references to the other contributors. The hon. Member for Merthyr Tydfil and Rhymney (Mr. Havard) made a strong defence of Parliament having its say, even when it can be embarrassing to one's own side. My hon. Friend the Member for Gravesham (Mr. Holloway) made a strong point about the apparently conflicting motives of our strategy in Afghanistan, but I have referred to that already. In support of what he said, I draw the House's attention to an article in today's Financial Times, Afghan officials face public fury as farm aid fails to materialise. It refers to one of the more northerly provinces and quotes the district governor in that impoverished area as saying:
	It would have been far better if we had promised nothing and simply told villagers that growing opium is against the law.
	The disappointment that has arisen in that part of Afghanistan at the failure of compensation for not growing opium to arrive is clearly proving a source of grave irritation, friction and potential danger for our forces.
	My hon. Friend the Member for Bournemouth, East (Mr. Ellwood) took the radical view that a process of managed partitionwhat he called a velvet revolutionmight be the answer to the situation in Iraq. I commend him for persevering with a view that at present may seem unorthodox. The strange thing is that solutions that start out by seeming unorthodox sometimes end up being adopted and vindicated in the future.
	The hon. Member for Colchester (Bob Russell), as always, spoke up for the Army units based in his constituency. Again, he took the very robust view that we should stay as long as the Iraqi Government want us to. I have already referred in suitably complimentary terms to the excellent contribution by my hon. Friend the Member for Reigate.
	In conclusion, the Committee has done a great service to the House of Commons, both by putting the Ministry of Defence on the spot about the inadequacy of the detail with which the estimates have been put forward and also, as my right hon. and learned Friend the Member for Kensington and Chelsea pointed out, by giving us an opportunity to debate some of the substantive issues that the Government have not been in a hurry to bring to the Floor of the House, at least since the general election. The Government should have the courage of their convictions. There is nothing to be afraid of in airing these matters in the House of Commons. Various Labour Members have debated them time and again when the opportunity has arisen. We debate these matters without rancour. We do not always come to an agreement, but at least we agree that the opportunity for a debate provides the best possible way of allowing an intelligent electorate to make up their minds.

Adam Ingram: Any debate that has the word defence in it usually ends up being wide ranging and the situation is no different today. We have covered quite a gamut of subjects, but there has been a core to the debate. I will do my best to reply to all the points that have been raised. It is always useful in a winding-up speech to be able to say, If time permits, but I am conscious of the fact that there is quite a lot of time available, which will mean that I may have to expand on some answers because I do not have answers to other points.
	Let me just make this point in passing to the right hon. Member for North-East Hampshire (Mr. Arbuthnot), who opened the debate. It was not long ago that he was a Minister. I suppose that if he had laid down new reporting procedures for the Department when he was there, this debate would be taking place in a different context. Only he can say why he did not think it necessary at the time to push for that. However, the Committee has raised issues that have provoked debate on matters of interest, which I will seek to addressperhaps not wholly satisfactorily today, but I will indicate the way forward on that. I also thank him for the considered way in which he opened the debate. He could have taken longer, as it turned out, and helped me by leaving a shorter time for my winding-up speech. His favourable comments on the role of the Defence Procurement Agencythere is also the Defence Logistics Organisation, which he did not mentionin the processing of urgent operational requirements were well made. Those organisations work extremely hard. The issue is not just about those who are seeking to purchase; as he knows only too well, it is also about those who are seeking to deliver. Sometimes the industry is in-house, sometimes it is external, but it really delivers for us in these times of urgent need. I will deal with the key elements of the report.
	I want to deal with two major contributions, although I will try to deal with all the contributions. I welcome the hon. Member for North Devon (Nick Harvey) to his new role. This is a more substantial debate than he experienced in his early introduction to that role. He should keep a close eye on the Order Paper because he is likely to be busy in the period ahead and he may reflect on why he took on such a task. I do not underestimate the massive learning curve experienced by all of us who become engaged in defence, but if that means that there is an opportunity to score political points off him, I will. I was not clear whether he supports the expenditure that we are now committing to the conflict in Iraq.

Nick Harvey: indicated assent.

Adam Ingram: That is very helpful. At least we have the support of the hon. Gentleman's party for what we seek to do at present.
	The hon. Gentleman raised questions about reconstruction costs in Iraq and expenditure intentions for Afghanistan in matters relating to counter-narcotics. Some of that does not sit within the estimates, as I am sure that he will appreciate. I will deal with that in a moment. He mentioned the allied rapid recruitment force. Just for the record, it is the Allied Rapid Reaction Corpsthat is the first lesson on defence. We all get our words mixed up sometimes, but it is important to get that corrected.
	Reconstruction in Iraq is continuing. It is not an easy territory or environment to achieve that in, because of the level of threat and the malign efforts of those who are trying to destroy not just what the coalition are seeking to do for the Iraqi people, but what the Iraqi people are trying to do for themselves. There is regular sabotage of both power lines and pipelines. A lot of effort is put in to deal with that. Hopefully, more progress will be made in the period ahead.
	There is a growing economy. It is not, in one sense, an economy in free fall. There are indications of growth in the economy, but it should be much more rapid given the oil wealth. Insurgents and those who are trying to destroy what we seek to do attack power lines because that stops the oil industry's capacity to produce. They attack the oil industry itself for the same reason. There are measurable improvements in water and sanitation systems and schools and hospitals have been constructed. So, there are ways in which we can measure progress.

Harry Cohen: Will the Minister give way?

Adam Ingram: No, I am going to deal with this point first. I will come to what my hon. Friend said and perhaps he can intervene then.
	The Government have pledged a total of 544 million for reconstruction during 2003 to 2006. More than 460 million has been disbursed to date. That is a considerable effort. In a sense, I do not take the view of my hon. Friend the Member for Leyton and Wanstead (Harry Cohen) that a lot of that money may be misappropriated or deliberately taken away by those intent on malfeasance. There might be examples of that happening, but it is not a feature of our accounting practices and the way in which we try to deliver.
	When my hon. Friend raises a question about such activity, he is casting an aspersion not on military people, but, in the main, on civilian people who face daily risks when trying to deliver the reconstruction effort in troubled parts of Iraq. Putting all that in context is worth while. The hon. Member for Colchester (Bob Russell) asked my hon. Friend whether he ever made favourable comments about our armed forces. I heard my hon. Friend's response, but hope that he also realises that many brave civilians are making an amazing effort to deliver such reconstruction.

Harry Cohen: I am astonished by the Minister's last comment. He is saying that because people are taking risks as civilian contractors, it is all right for them to do a bit a malfeasance. I do not think that it is, so he should reflect on his comments.
	The Minister makes a point about reconstruction. Let me remind him of the point in the New Statesman about hospital supplies that I cited in my speech. Iraqis do not need to be involved in the production of medical equipment and basic supplies for hospitals. We could have just shipped them in, flight after flight, on our Hercules airplanes. We could have sent mass supplies to equip the hospitals properly. Why have we not done so?

Madam Deputy Speaker: Order. The hon. Gentleman's intervention must be brief.

Adam Ingram: My hon. Friend of course completely misconstrued what I was saying. I was not in any way justifying any wrongdoing on the part of people who have their hands on public money in Iraq or anywhere else. I was saying that a balance must be struck when analysing the situation. My hon. Friend made severe criticisms without putting balance to them, so I was merely putting forward such balance. I noted that he still did not congratulate those civilians on all that they are doing to help to reconstruct Iraq.
	Let me return to the points made by the hon. Member for North Devon. There are infrastructure projects worth 30 million in south-east Iraq. There are power infrastructure projects worth 40 million and there is 6.5 million for employment generation. There is 20.5 million for strengthening the operating capacity of the four southern governorates and to encourage private sector growth. Considerable progress is thus being made. However, those significant contributions are part of the contributions made by other Government Departments.
	The hon. Gentleman asked about the capability of the Taliban and the way in which we measure that in Afghanistan. I said when I gave evidence to the Defence Committee that that capacity is difficult to measure because whoever is paying some of those who are likely to mount attacks on any given day determines the uniform that they will put on and the cause for which they will fight. We are trying to get the best intelligence that we can. Our assessment of the situation is that illegally-armed groups are limited. We do not believe that they pose a strategic threat, although we are not saying that what we are doing in Afghanistan is without risk.
	The fact that the insurgency tactics have changed suggests that the groups are failing to make headway. However, of course, we cannot be complacent. We must take the view that the tempo of attacks might go down, stay the same, or go up, which is why such a powerful and potent international force is going into Helmand. We treat threats seriously and take every step to ensure that British forces deployed in Afghanistan are well prepared. Intelligence on what is happening on the ground is critical to that, so we put a lot of effort into it.
	On counter-narcotics, we intend to spend more than 270 million in the financial years 200506, 200607 and 200708 in support of what we call the Afghan strategy. That includes 130 million of Department for International Development assistance that is aimed at creating alternative livelihoods. Between 20 million and 30 million will be going to specific projects in Helmand. We have a significant programme of work to address alternative livelihoods, and although others will also put in resources, only time will tell whether that is sufficient.
	My hon. Friend the Member for Leyton and Wanstead asked whether we were getting good value for our money in Iraq. He should ask the Kurds and Shi'as who were systematically crushed and brutalised by Saddam Hussein and his barbaric regime. Is it worth it to remove tyranny? I think that it is. Is it worth it to give freedom to oppressed people? I think so. There is no question in my mind about what we are doing in Iraq. I think that the continuing price that is being paid for stabilising and bringing freedom to Iraq is worth it, but clearly my hon. Friend has a different view. The way in which he deals with that is a matter for him. I shall address other hon. Members' contributions later, but I wanted to talk about those made by the hon. Member for North Devon and my hon. Friend the Member for Leyton and Wanstead first.
	The debate takes place against the background of the continuing activity of our armed forces in both Iraq and Afghanistan. I would like to take this opportunity to pay tribute to the courage, commitment and professionalism of our armed forces serving in Iraq and Afghanistan in what are often difficult and dangerous circumstancesI know that the whole House will agree. However, as this is an estimates day, I had better make some progress by saying something about finance. The Ministry of Defence is seeking 2 billion in additional resources in the spring supplementary estimate. Just under 1.4 billion of that is for conflict prevention work, including almost 1.1 billion for Iraq and 220 million for Afghanistan.
	Let me turn to the Defence Committee's report because it forms the basis of the debate and major contributions have been made on it. The report made nine conclusions and recommendations, and I would like to deal with each of them in turn. The Committee questioned the level of contingency built into the estimates in relation to conflict prevention. The contingency is there for a very good reason: prudence. Paragraph 8 of the Committee's report recognises that it is necessary to be prudent when dealing with contingency. My Department has to forecast the costs of a rapidly changing operational situation, so the inclusion of a contingency is wholly justified. To put the contingency in context, since last November, business cases totalling well over 100 million have been approved under urgent operational requirement procedures for a range of equipment that is required for both Iraq and Afghanistan, although not all that money will be spent in this year. I know that the right hon. Member for North-East Hampshire will understand that although a business case might be made and one might want to proceed, things do not necessarily happen in the financial year that has been suggested. That can lead to spill-over, so a contingency is important.

James Arbuthnot: It was not the inclusion of a contingency that caused us concern, but the inclusion of a contingency without full supporting detail.

Adam Ingram: I have explained some of the rationale behind that. The report recognises that some things might not be played out publicly because of such good reasons as operational considerations. It is not wise to state everything that we are doing to improve our equipment and capability in response to a specific threat. The scale of the 146 million contingency has been referred to, and I have already given an indication about the 100 million aspect of the budget. It would be difficult to give full granularity because although one can put forward a contingency, what is wanted might not materialise. Of course, if the money is not spent, the financial resource is not delivered. Over time, as specific urgent operational requirements have arisen, we have, when there has been no operational sensitivity, indicated what the requirements involve.
	Recommendation 2 claims that the MOD did not take the previous Defence Committee recommendations seriously: I do not accept that. We have produced significantly more information this year than in any previous year in the estimates memorandum. The new information includes the inclusion of tables of figures that break down the detail of each request for resource; detail of transfers to and from other Departments; a detailed breakdown of provisions and, importantly, a published audit trail of changes since the main estimates. There is much more explanation and clarity than in previous years, but we have to seek to go further still and we will reflect on the points that have been made in the report.
	We are planning to provide more detailed information on the cost of operations in our annual report and accounts, which is the appropriate place to do so. That information will be comparable to the level of detail we have recently provided to the Committee, and I hope that that finds favour with the House.
	The fourth conclusion and recommendation made by the Committee was that agreement of the Treasury is not a substitute for parliamentary approval. I could not agree more and I am sure that the Treasury would also agree. But we would hardly seek Parliament's approval to spend money without having closely consulted the Treasury in advance. I have been closely involved in such matters for several years, with the MOD and a previous Department and I know that the Treasury has a very important role to play in the tight scrutiny of departmental requests.
	The reality is that we have to convince the Treasury before embarking on any significant course of action. That is part of the discipline within government. We have to justify our accounting processes, and ensure that they are sound. They must form part of the Government's mission and we must ensure that we have sufficient resources to achieve that mission. The process of consultation with the Treasury is a very important element of the work of all Departments. Indeed, I do not think that the Committee is arguing against such scrutiny by the Treasury. We have provided more information to Parliament this year than we have done before, and where we can, we will seek to improve further.
	The Committee recommends that our practice of waiting for the spring supplementary estimates to request funds for commenced operations should cease and recommends that they are requested in the main estimates. It has been the practice that that request has been made in the supplementary estimates. That has been the traditional approach because costs are difficult to forecast in fast moving operational circumstances. My Department works hard to ensure that the figures presented to Parliament are reliable, and supplementary estimates are the first occasion on which we can reach a reasonably firm conclusion. However, we will look closely at the Committee's recommendation in consultation with the Treasury.
	On recommendation 6, the Government have never routinely published operations expenditure data in-year, as the Committee requests. We provide an estimate based on the forecast of the cost of operations in the supplementary estimates. At the end of each year, the actual expenditure is audited by the National Audit Office, and then published in the annual report and accounts. As I have already said, we will be publishing more detail in this year's accounts. We are trying to obtain the best information and ensure its substance so that we can be properly judged, instead of providing the working figures for the MOD and the Treasury.
	Recommendation 7 relates to the provision for operations in the Balkans in the main estimates. That is 64 million for the current financial year. Provision for operations in the Balkans comes from what is known as the global conflict prevention pool. Pool funding ensures that no single Department becomes liable for those costs. The Foreign and Commonwealth Office has always been the lead Department for administering the funds, and requests funding in its estimates on behalf of all the pool members. We make a contribution to the discussion on the collective amount that should be sought. We will consult the other Departments involved on the impact that making the recommended change would have on the long-established collective conflict prevention management arrangements, but I believe that the system we have works well. I am prepared to consider the point, but the current arrangements are clear. If we could do it another way, and the other Departments agree, we will come back to that issue.

Angus Robertson: Will the Minister give way?

Adam Ingram: Well, I wish to make some progress now. I may get the chance later to allow the hon. Gentleman to intervene.
	Let me turn to the costs of Afghanistan and recommendation 8. On 26 January, my right hon. Friend the Secretary of State announced that some 1 billion would be spent on Afghanistan, which includes the 220 million being requested in this estimate. A breakdown of that was provided to the Committee at its request, the major elements of which are 121 million on infrastructure, stock equipment and the support items needed by our troops to carry out their daily duties, and 53 million on capital equipment relating to force protection. Those are the headline items, but the list also includes 150 million for resource expenditure and 70 million for capital expenditure. Resource costs include manpower-related costs of 8 million pounds, infrastructure costs of 26 million, equipment support of 15 million, stock consumption of 34 million, general costsincluding food, fuel and movement costsof 46 million and a contingency of 14 million to cover uncertainties over the planned expansion programme.
	The major elements of capital costs are the urgent operational requirement and equipment support costs of 53 million and a contingency of 17 million. Costs for future years are more difficult to forecast and the Department works hard to ensure that the figures presented to Parliament are reliable. It must be our main purpose to provide reliable datanot working figuresso that we can be held to account effectively. Supplementary estimates are the first occasion on which the Department can reach a reasonably firm conclusion. I spent 10 years in opposition

Julian Lewis: Tough!

Adam Ingram: Well, the hon. Gentleman had better get used to tough times. I would have thought that the Committee and Parliament would have preferred hard figures rather than notional ones, on which to base their assessments.
	My final point on the Committee's report is that the MOD has this year followed the scrutiny unit's guidance in producing the estimates memorandums. They were approved by Ministers and the accounting officer before being passed to the Committee. I understand that the document was not signed off, but that does not mean that it was not properly authorised. Paragraph 19 of the report makes a number of assertions that I believe are not based on fact. The Department's estimates memorandums included details on the summary of changes since the previous estimate, the most significant changes, a detailed explanation of the changes, the net additional cash required and the provisions and contingent liabilities.
	On the point about end-of-year flexibility made in recommendation 9, my Department drew down end-of-year flexibility of 71.7 million in resource departmental expenditure limitsDELand 28.3 million in capital DEL in the winter supplementary estimates, and those figures have not changed. I have gone through some of the detailed changes and I will consider the recommendations to see whether we can proceed in other ways. Probably only two or three people who have participated in the debate have read the report through, although others will claim that that is not the case, and I have tried to answer the detailed points made.
	I come now to some of the points raised by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Havard). He was clear in his support for our people in Iraq and Afghanistan. He raised several equipment-related issues and the threat posed to our personnel as a consequence. The balance of risk is always factored in, in terms of force lay down. I appreciate that my hon. Friend has occasionally worn uniform when taking part in the armed forces parliamentary scheme, but on this occasion I shall stick with the advice given to me and the Secretary of State by our senior military planners and the Chiefs of Staff. However, I thank my hon. Friend for his support.
	I made notes while the right hon. and learned Member for Kensington and Chelsea (Sir Malcolm Rifkind) was speaking, but his hon. Friend the Member for New Forest, East (Dr. Lewis) quietly laid to rest some of the basis on which the right hon. and learned Gentleman advanced his cause. The right hon. and learned Gentleman said that there was no international legitimacy for going to war in Iraq, but he ignores the 17 resolutions that sought to bring Saddam Hussein to book. I think that he ignores the fact that every major country was of the view that Saddam Hussein had the capacity and the intention to develop weapons of mass destruction; not one country, or their intelligence services, took a different view.
	The right hon. and learned Gentleman also ignores United Nations Security Council resolution 1441, which was unanimously adopted and clearly indicated that there would be consequences for non-compliance. I think he was arguing that members of the UN should have a veto on the course of action that we and other countries should take, but that is a dangerous approach, which would mean that we were constrained by the geo-political interests of our alliesthose interests, rather than those we consider important, would be uppermost.
	I could not work out the logic of the position taken by the hon. Member for Gravesham (Mr. Holloway). Was he saying that we should not encourage or help the Government of Afghanistan in their aim of reducing poppy cultivation? Clearly, we should do so, but the hon. Gentleman offered no solution to the problem. I have set out the amount we are spending on alternative livelihoods and we know that the Afghans are putting in significant effort. There are risks but we have to continue. The hon. Gentleman offered no alternative approach.
	The hon. Member for Bournemouth, East (Mr. Ellwood) said that it was a mistake to ignore calls for a broader coalition to deal with Saddam Hussein. However, the coalition of the willing was 32 countries-strong at the outset and increased shortly thereafter. There was a broad coalition for taking on Saddam Hussein; not every nation allied itself to it, but there was a significant combination of countries. The hon. Gentleman said that it was right to deal with Saddam Hussein, so in that case what more could have been done than our Prime Minister did? He made extreme efforts to try to ensure that there was unanimous support in the Security Council, but it was not forthcoming. As I pointed out to the right hon. and learned Member for Kensington and Chelsea, there were 17 UN Security Council resolutions over 12 years, and UNSCR 1441 was specific in its analysis of the threat posed by Saddam Hussein's regime.
	The hon. Gentleman called for the managed partition of Iraq, which is territory we have covered before. He alluded to a previous debate in which a similar solution had been proposed for Afghanistan. He recovered himself a bit by saying that it was for the people in those countries to come to that conclusion, but he seemed to be indicating that, in the case of Iraq, we should encourage them to do so. I do not believe that it would be beneficial to fragment Iraq at this juncture, although at some point in the future it may be. As I commented recently when giving evidence to the Select Committee, we are still a United Kingdom, but the people of the country's constituent parts can determine their futurewhether in Northern Ireland, Wales or Scotland. It is a matter for the people to decide.

Tobias Ellwood: I pose again the question that I put in the debate. At present, between 60 and 70 people are being killed every day and Iraq is heading towards civil war. How many more people need to die every day before the Minister wakes up and agrees that the country is heading towards civil war?

Adam Ingram: There has been much analysis of that point and although I recognise the hon. Gentleman's military background and experience, his view is not the received wisdom and considered opinion of senior military personnel on the ground. I am not saying that there are not serious issues of sectarian violence and divisions in Iraq, but as my hon. Friend the Member for North Durham (Mr. Jones)who is no longer in the Chambercommented, what we read in the press is not typical of the whole of Iraq. There are serious hot spots and some big issues to address, but they are not typical of the whole country. The more those situations are talked up, the more we feed the insurgency. I do not believe that the descriptions are valid, but the more we use such language, the more the insurgents will believe that they are winning. They will escalate their efforts because they think that our will is broken. Such talk is dangerous, although people should express their views if they honestly believe them, but they should be balanced against other advice and opinions. If the situation descends to civil war, we shall have to deal with it accordingly, but we are not in that position yet and every effort will be made, with the will of the Iraqi people, to avoid it.
	The hon. Member for Colchester noted, rightly, that on his recent visit morale was high. To read some newspapers, it would seem that our British Army is a broken force and that our forces are not interested and are leaving in droves. That is simply not the case. As I have said before, at the Dispatch Box and elsewhere, I am privileged because, due to the nature of my job, I probably meet more members of Her Majesty's armed forces than any other Member. Indeed, I probably meet more of our armed forces than some senior officers, given their roles. The morale of our forces is consistently high; they are extremely committed. Yes, they complain about some aspects of their kit, but that is not a fundamental issue. Any member of Her Majesty's armed forces will say that the current operational welfare package is considerably better than its predecessor. We learned lessons. We knew that we had to adapt and we are committing considerable resources to that element.
	The hon. Gentleman made a point about air transportation. As he is aware, the fleet employed for that purpose is ageing. We are trying to ensure that alternative aircraft are available, because it is wrong that forces being recovered from theatre for rest and recreation are unduly delayedthey should not be delayed at all. The point is well taken in the Army and in the RAF, which supplies the logistics. Much effort is being put in.
	The hon. Member for Reigate (Mr. Blunt) is no longer in the Chamber, but he advised me earlier that he had another commitment. He raised many concerns about the style of US operations. However, the US has taken the full brunt of the insurgency and the foreign elements in Iraq, although that is not to say that we have not tackled major issues head-on. We have and, sadly, we have lost a significant number of people in such actions. I hope that the hon. Gentleman recognises that it is accepted that the immediate post-conflict and reconstruction process has not been well handled. Lessons have been learned, although we cannot recover what should have been done in the past. We can only learn the lessons and ensure that we make considerable progress from now on. That is why I gave details about the amounts that we were spending on the reconstruction and renewal of Iraq. The US is also spending considerable sums.
	We should pay tribute to the US for all that it does to help to bring freedom, stability and democracy to so many parts of our troubled world. We should not forget the role of the Americans in the Balkans and Kosovoand in Afghanistan, where they are determined to rip out the vestiges of al-Qaeda. If the Americans were not doing that, who would? Who would take on global terrorism if not the US, with us giving significant support? If that was not done, we can be sure of one thingglobal terrorist groupings would grow and threaten our very way of life. They will not go away; it is not domestic terrorism, but a global terrorist threat that has to be tackled at the point of threat. We cannot wait for the next attack before winning public opinion to our side, although that is required. We have to make sure that we are tackling the threat with vigour.
	I think that the hon. Member for Reigate was too quick to condemn the US and I ask him to reflect on his position. He said that the Afghan mission was vague, but the mission of UK forces in Afghanistan is clear: to support the Government of Afghanistan in extending its authority across the country. We are part of an unprecedented international intervention, UN mandated and NATO led, working alongside Canada, the Netherlands, the United States, Denmark, Romania, Australia and Estonia in the south, and many other nations elsewhere in Afghanistan including France, Germany, Italy, Spain and the Nordic countries. We should also bear in mind the growing capability of the Afghan national army. NATO has a detailed operational plan, which sets out precisely what NATO forces need to achieve in Afghanistan. All of that takes place in the context of the much wider international effort building on the success of the Bonn process and marked out comprehensively in the Afghanistan compact agreed at the London conference in January this year.
	The mission in Afghanistan is demanding a lot of us, but I repeat the question that I asked a few moments ago. Some argue that we should not do it, or that we do not have sufficient resources for the taskI do not agree; it is part of a wider international effort in support of the Afghan national armybut what would it mean if we were not there? What would that mean for this country? I think that it would be extremely serious if Afghanistan descended back into an ungoverned state.
	I found myself agreeing with much of what the hon. Member for New Forest, East said, although I will not tell him which parts of his speech I agreed with and which I did not. As ever, he made a thoughtful contribution. I share his view that it is Parliament's role to hold the Government to account. We have had a brief but wide-ranging debate, and I have tried to deal with the key issues on which the debate is based. I hope that the House will agree that I have responded in a reasonable, helpful and constructive way. Only time will tell.
	Question deferred, pursuant to Standing Order No. 54(4) and (5) (Consideration of estimates c.) and Order [9 March].

Department of Health

[Relevant documents: Oral and written evidence taken by the Health Committee on 1st and 6th December 2005, HC 736-i, -ii, and iii, on Public Expenditure on Health and Personal Social Services 2005; and The Department of Health Departmental Report 2005, Cm 6524.]
	This Estimate is to be considered in so far as it relates to NHS financial deficits (Resolution of 16th March).
	Motion made, and Question proposed,
	That, for the year ending with 31st March 2006, for expenditure by the Department of Health
	(1) further resources, not exceeding 1,785,769,000, be authorised for use as set out in HC 827,
	(2) a further sum, not exceeding 2,364,998,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
	(3) limits as so set out be set on appropriations in aid.[Jane Kennedy.]

Madam Deputy Speaker: I advise all right hon. and hon. Members that after the first speech, there will be a 10-minute limit on all Back-Bench speeches.

Kevin Barron: First, I congratulate the Committee Office scrutiny unit on its good work on advising Members.
	Today's is a timely debate, given that a number of trusts face severe financial deficits. The Department of Health spring supplementary estimate includes large sumsmore than 500 million of public dividend capital, including more than 195 million year end flexibilityto increase the loan capital to national health service trusts and primary care trusts. Those sums are in addition to the 200 million requested in the winter supplementary estimate for 200506. We are therefore discussing a considerable amount of money in addition to the substantial increase in health care expenditure in this country that has been going on for four or five years under the Labour Government.
	The expected NHS deficits are attracting a great deal of press comment. People coming from another planet would wonder how some of the trusts have incurred such massive overspends given that there have been large increases in health budgets for many years now. In the Opposition day debate last November, my right hon. Friend the Secretary of State said:
	the reason why there are deficits in a minority of trusts is that, in some cases, there has been overspending, sometimes for several years, or poor financial management, or poor organisation of clinical services.
	She continued:
	We are taking the steps needed to reduce the overall deficit this year and to ensure that, at the end of the next financial year, the NHS will again be in balance.[Official Report, 15 November 2005; Vol. 439, c. 850.]

Nicholas Soames: I agree with the right hon. Gentleman on that point, but is he aware that 87 per cent. of the increase this year has been spent on meeting increased cost pressures? If costs in the NHS continue to increase at their present rate, the deficit by 2010 will exceed 7 billion. How does he envisage the Government tackling that problem?

Kevin Barron: I have several questions on NHS costs to put to the Minister of State, Department of Health, my right hon. Friend the Member for Liverpool, Wavertree (Jane Kennedy). Some hon. Members may have read my recent comments in the press on the fact that we know what the NHS spends, but not what it costs. I think that, after 58 years, we ought to know exactly what it costs. I shall go into detail on that issue later.

David Taylor: May I challenge the figure given by the hon. Member for Mid-Sussex (Mr. Soames)? I agree that the sum is substantial, but that figure cannot be correct. At least 20 per cent. of the increased spending on the NHS is going on new staff and staff in new posts, which is delivering a wider range of services. It cannot possibly be the case that 87 per cent. of the increase is somehow being spent on inflation.

Kevin Barron: My hon. Friend is probably right. I have never looked at costs in detail, but we know that NHS inflation is higher than ordinary inflation in our economy. Perhaps the hon. Member for Mid-Sussex will speak during the debate and tell us how he arrived at that figure.

Bob Spink: Does the right hon. Gentleman share my concern that strategic health authorities and PCTs trying to remove the deficits will seek soft targets for cuts and that that will put even more pressure on hospice budgets? The average children's hospice gets only 5 per cent. of the funding it needs from those sources, and Little Havens in my constituency gets only 1.8 per cent. Will he do all he can through his Committee to bring pressure to bear on the Government to tackle the hospice funding formula?

Kevin Barron: I heard the hon. Gentleman's question during Prime Minister's Question Time last week and I am with him on that issue. The Bluebell Wood children's hospice is being built in my constituency, so I shall have an even greater constituency interest in years to come. However, I would be misleading the House if I were to say that my Committee is likely to look into children's hospice funding in the next few months.
	It is striking that there was no warning of the deficits. Last year, on a budget of 67 billion, there was a deficit of just 250 million. When they gave evidence to the Health Committee on 1 December last year, the former permanent secretary at the Department and the then NHS chief executive, Sir Nigel Crisp, told us:
	The actual overall deficit in gross terms, in proportion terms, is pretty small.
	Perhaps so, but the House will have seen that when he left his post earlier this month, he was quoted in the press as saying:
	The deficits are clearly going to be too big, and I'm sorry we are going through a bad patch.
	I think that most of us who know Sir Nigel will congratulate him on his retirement and hope that it is a long and happy one. I do not know whether he will make it into the other place, but during the few short months that he and I were involved on the Health Committee, I regarded him as a good professional. I wish him well in whatever he does in the future.
	In 200405, the NHS overspent by just 250 millionthe first time that it had overspent since 19992000. That was reported by the NHS director of finance in his January 2006 report to the Secretary of State for Health. The director of finance emphasised that the overspend was small in relation to the overall sum managed, but said that it was still a cause for concern. He highlighted three reasons for that concern. First,
	there was a significant deterioration between financial forecasts and
	financial outturn. Secondly,
	in some of the organisations with the largest deficits recovery plans were not delivering.
	Thirdly, the overspend
	was arising at a time of . . . sustained growth in resources.
	In some ways, everyone was surprised by such a large increase in deficits. The financial director also reported that
	despite the action taken, we were still seeing no improvement in the financial position
	and that the NHS estimated
	deficits for 200506 of 623 million net and 948 million gross.
	Those comments were made in the Financial Turnaround in the NHS report published in January. That represents an overall increase in the deficit of 150 per cent. on the 250 million deficit reported in 200405. That increased deficit threatens to destabilise the NHS, so we must control it. I am a great believer in the national health serviceI always have been, and I always will bebut we will lose out if we do not gain control and find out what it costs to provide services for our constituents. The only way to do that is to ensure that bottom-line balances at the end of each year for all NHS trusts give a true and accurate picture of the level of activity and are not fictitious figures. Sadly, on occasion, people who have overspent have wanted to hide that fact by submitting fictitious figures.

David Burrowes: In his deliberations in Committee, has the right hon. Gentleman encountered a reluctance by the Government to engage with the Audit Commission, which wishes to establish exactly what the costs and out-turn are? Does he surmise that that reluctance is because the Government do not want to expose the fact that the directives, edicts and targets that they have issued have created problems for Chase Farm hospital in my constituency, for example, which has been pressurised to dismantle its accident and emergency facilities?

Kevin Barron: The Government cannot avoid the Audit Commission, which has a statutory role. I shall deal briefly with the work of the Audit Commission in the past few months, but I advise the hon. Gentleman not to turn around and say that he knows the reasons for the overspend. Most people do not know the reasonsI shall deal with that laterand the situation is not as simple as he suggests.

Andrew Lansley: The right hon. Gentleman said that we should not seek to disguise or obscure the nature of the deficits, and I entirely agree. Does he therefore agree that it is important to focus on gross deficits? It is not good enough simply to talk about net deficits. Last year, as he said, there were gross deficits of 623 million. This year, as of month 6, they were nearly 1 billion. It will not do for Ministers to tell the House, as they have in the past, that the net deficits will be the same as they were the previous year when, only three weeks later, they admit that the gross deficits cited in our debate in mid-November of nearly 1 billion were accurate.

Kevin Barron: I agree that we need an open and honest debate. The greatest problem for the NHS, certainly since I have been a Member of Parliament, is the fact that it is treated as a political football. It appears in everyone's manifesto, and it is kicked around almost every day in the House. I am not suggesting that Ministers in the present Government have done this, but Conservative Ministers did not want to advertise certain issues, as they knew that they would be magnified and turned over by the press. As a result, we do not have sensible debates on health care, but it is about time that we did.
	The report that I cited earlier says that 28 PCTs with a combined turnover of 5.6 billion were forecasting a deficit of 264 million, or just 4 per cent. Thirty-four NHS trusts with a combined turnover of 6.5 billion were forecasting a deficit of 467 million, or 7 per cent. That excludes foundation trust hospitals. Analysis by accountants KPMG showed that 18 organisations required urgent intervention and that 23 needed additional expertise and/or resources. It is not clear from the report whether such interventions and additional resources are helping to turn around trusts' finances.

James Arbuthnot: Is not one thing that the report highlights the effect of change, which can create huge cost differences? Frimley Park hospital, a foundation hospital that serves my constituency of North-East Hampshire, has hugely increased the costs that it charges to my primary care trust. As a result, the hospital will end up with a 17 million surplus, whereas my primary care trust has a huge deficit. Is it not that change that we need to address in our debate?

Kevin Barron: Yes, but I do not think that it is a structural issue. The cost charged to the PCT may not be the cost of the activity itself. That is a crucial issue for the NHS.
	Monitorthe independent regulator of NHS foundation trustsidentified the fact that NHS foundation trusts incurred an aggregate deficit of 36.9 million in 200405, which represented 0.9 per cent. of their income. This year, one in every 32 trusts is forecast to incur a substantial deficit for the first six months of 200506, although in aggregate trusts forecast a surplus for 200506. However, that forecast carried heavy caveats in Monitor's report, a copy of which has been placed in the Library. No doubt hon. Members will wish to look at it, as it deals with the issues raised by the right hon. Gentleman. We need to know how foundation trusts with a large increase in income have achieved that balance.

John Pugh: On PCTs and foundation trusts, is there any variation in the position of PCTs depending on whether they predominantly serve foundation trusts?

Kevin Barron: That has not been brought to my notice, but I hope that it will not be long before the House has a chance to debate the causes of the deficits.
	Another serious concern is the number of reports in the public interest issued by the Audit Commission to acute trusts, strategic health authorities and PCTs following significant financial problems. The hon. Member for Enfield, Southgate (Mr. Burrowes) raised that earlier, but has now left the Chamber, presumably to issue a press release. Under section 8 of the Audit Commission Act 1998, the external auditor must consider whether it is in the public interest to produce a report on any significant matters that come to his attention. If it is, they are set out in a public interest report. Twenty-seven public interest reports have been issued for SHAs, PCTs and NHS trusts since March last year, which reflects the number of NHS bodies with significant and potentially destabilising financial problems. No matter what people say, the Government cannot avoid the Audit Commission which, like some parliamentary Committees, exists to look at public expenditure. I am sure that it will do the competent and professional job that it has done in the past.
	A number of reasons have been given for the continuing financial deficits. A review by KPMG in December 2005 concluded that management capability was inadequate to deal with the financial position of trusts, that the quality of information was impeding recovery and that, in some cases, SHAs had permitted unproductive behaviour to damage the relationship between PCTs and hospital trusts. The Audit Commission's managing director of health said that the number of such problems may lead to organisations having to merge to remain viable and he has asked for clarification of matters such as the way in which charges are made for elective and emergency care.
	Mergers are under way, so a debate on the issue is for another day, but in the next few days and months, we should look at the wider issues that have been highlighted and the questions that have been asked to try to find out exactly what the NHS costs. I gave an interview to a national newspaper earlier this month in which I said very much what the Secretary of State had said: we must make sure that we discover the cause of the overspends so that, hopefully, they will not happen again.

Howard Stoate: May I remind my right hon. Friend that last year was the first full year of the new GP contract and the new consultant contract, both of which were long overdue and have made significant differences in patient care and outcomes? We talk about large overspends, but it is also fair to say that they have often been put to very good use and that to keep within 1 per cent. of the overall NHS budget is not a bad result if looked at in that way.

Kevin Barron: I cannot agree with my hon. Friend about that. I will not say that he has a vested interest, although he has on some days of the week. All trusts pay exactly the same increases for the health professionals that he mentions, so why do some trusts work to budget when others overspend massively? That overspending is not right. It is not fair on those that keep to budget and try to do the best that they can within certain limitsalthough the limits have increased, year on year, for the past four years.

John Hemming: I have here a report, dated 2004, in which the Chartered Institute of Public Finance and Accountancy says that, if national tariffs are imposed, as has been the case for 8 billion-worth of expenditure, about
	160 NHS trusts and PCTs would suffer deficits of more than 9 per cent.with almost 70 facing deficits greater than 25 per cent.
	Does the right hon. Gentleman think that the imposition of national tariffs is relevant?

Kevin Barron: I am about to move on to that issue. I gave an interview to a national newspaper, and I got a letter the following day from someoneI will not name himwho works with an SHA department that is considering the costs of the NHS. I have copy of the letter in front of me. He said:
	As you will be aware, it is a statutory requirement for all hospitals within the NHS to provide cost data'reference costs'to the Department of Health. These data are then used to formulate the national Payment by Results tariffs. The philosophy behind this is sound and used elsewhere.
	He cites Australia, where he has worked. He has worked in a few health services around the world. He continued:
	The immutable truth of this system, however, is that your funding policy is only as good as your cost data. If your cost data lack integrity and the methodology for costing contains flaws, then it follows that the funding policy is also going to lack integrity and be flawed. After four months here, I have to say that I, and my colleagues working on this project, have been shocked at the level of cost data produced in the reference costing process. I could only describe it as the lowest common denominator of costing I have seen in a health environment. I think it goes some way (obviously not all) to explaining the financial problems of hospitals here.
	There are a few reasons why the state of costing is so poor here in the NHS. The main problem is that reference costing in the NHS is an extremely 'top-down' averaging process.
	He then gives an example, which I hope my right hon. Friend the Minister will consider. I will ask the person who wrote the letter whether she can have a copy. I could not contact him at work today. I have got his phone number, but he was not at his desk when I tried to contact him. He then continued:
	More often than not, no adjustment is made for differences in patient acuity during this cost allocation process. This method of cost allocation makes the assumption that on an obstetrics ward (for example), a woman recovering from a caesarean in one bed is accruing the same nursing, medical drugs, medical supplies and other resources as the woman in the next bed, recovering from the normal uncomplicated delivery of her second child. As a clinician yourself
	I am not one
	would you believe that data?
	He then says that, while we have that system in the NHS, the most sceptical people will be those who work in it, and he makes a very good point. I would not dispute what he says about what we are doing at the moment, and if it is true, it will have that impact.
	My constituency is covered by the Rotherham PCT, which, in an e-mail to me a few weeks ago, said:
	The national tariff price is higher than our local price so we are now paying more for the same level of work.
	That is grossly unfair in the circumstances, so we should charge the actual cost of the health service. I am not too sure whether we will do so if we are basing payment by results on reference costs. That might be a good start, but it will certainly not be an end in finding out exactly what the different activities in the NHS cost.

Andrew George: Has the right hon. Gentleman, who is the Chairman of the Select Committee on Health, considered applying the same principle to PCTs more widely, not just to the cost of individual procedures, instead of perhaps finding reasons that are associated with poor management, which is the direction in which he appears to be steering? I think that that is the theme that he is developing. His assumption presupposes that funding is provided evenly across all trusts and meets need. Does he accept that there may be circumstances where acute deficits are occurring because the funding formula does not properly reflect need?

Kevin Barron: Yes, I agree entirely. A lot of NHS budgets are still historically based. I have looked at the issue over the years that I have been a Member. We still do not have budgets that reflect the activity needed to look after patients in different areas, and we never will if we do not know the costs of the NHS. There are some big issues.

Joan Walley: Does my right hon. Friend agree that there is a problem with payment by results? In north Staffordshire, we have a hospital on two different sites. Given the formula by which the hospital is paid by the PCT for the different procedures that are carried out, and if there is such an imbalance on top of all the other social inequalities, it stands to reason that we are heading for a deficit. Indeed, we have just reached that situation: we are looking at about 1,000 job losses.

Kevin Barron: Such job losses make it a difficult time for the NHS. The other Rotherham Members and I have been lobbied about that. The front page of the local weekly paper says that student nurses who are on secondment doing their practical work in Rotherham general hospital have been told that there are not necessarily jobs for them in the local foundation trust. The trust has had to take some tough decisions to avoid going into deficit this year. It has asked people to work differently and has left vacancies unfilled.
	Last week, I received a letter from the chief executive of the Rotherham NHS foundation trusts who said:
	To achieve the efficiencies necessary whilst maintaining existing levels of patient service we need to restructure.
	The letter gives a very honest answer about those student nurses, saying:
	the Trust cannot guarantee a job on completion of training to any student it takes on placement, but we do make students aware of vacancies for which they are eligible to apply.
	I entirely agree with the chief executive. We must decide what the NHS is for: is it there to treat patients who are in need of it or as some sort of social employment that will employ people come what may? In those circumstances, like the rest of the public sector that has had to take such decisions occasionally, it is wholly right that my local NHS trust should not guarantee people jobs, as much as that is not liked by people. Its primary aim is to look after the patients who go to that hospital now and in the years to come. I hope that those students nurses will get work, but there should be no guarantee that that will come before the interests of looking after patients.

Graham Stuart: Does the right hon. Gentleman believe his colleagues are waking up to the calamity that is financial management of the NHS? Does he agree that it is not education that will bring about the removal of the Prime Minister from office, but the realisation that thousands of jobs in the NHS will gowe have seen only the tip of the icebergbecause nothing has been thought through by the Government, be it in relation to IT, payment by results, the tariff or GP and consultant contracts?

Kevin Barron: It is not a calamity at all. The only pressure on my annual home budget is that 0.7 per cent. is on the edge. We do not know whether it will be available for the rest of the year. That is not a calamity. It is just as well that we are going through the process of finding out what the NHS costs while we have a Government who have put so much extra money into the national health service. I have sat on the Opposition Benches when Governments have made real cuts in health expenditure and in other parts of the public sector, too.
	When we get through the process, as we inevitably will, we must make sure that we know what the NHS costs. In future, annual budgets for hospitals and other parts of the health service must be based on their costs, not on what they would spend if they were given the money. That is crucial to the debate.

David Taylor: My right hon. Friend asked, perhaps rhetorically, what the NHS costs. The answer is about 200 million a day. Over the three hours of this debate, that works out to about 25 million. That is a vastly increased sum, compared with the tattered baton that was passed to us on 1 May 1997. Certainly, financial management needs to be improved. Does he agree that some parts of the NHS are under-managed, contrary to the stereotype often portrayed by the Opposition of an NHS groaning under bureaucracy? Some parts need better management, especially by accountants, and I declare an interest.

Kevin Barron: I can neither agree nor disagree. My hon. Friend is probably right. The NHS is not over-managed. That has been a political football across the Chamber for all the years that I have been in the Housemanagers in the NHS, not people on the front line. The Health Committee announced a few weeks ago that we would look into health care staffing. We will look at management, as opposed to clinical and other related grades in the NHS.
	I want to deal with two further points: how the Government are responding to the situation and what they are asking the NHS to do. It may not be difficult for people to come to terms with the actions that the Government are taking in the short term. My primary care trust is in south Yorkshire. I understand that in next year's budget the Yorkshire strategic health authorities have been asked to place 2.5 per cent. of their overall budget in reserve because of the need to balance the books nationally in light of the current overspend. That means that my PCT will not get 7.5 million of its growth money. There is still a lot more growth money going in, but it is still a difficult decision for the PCT to accept. There was a board meeting this afternoon at which it was accepted.
	The rest of south Yorkshire will also have to put 2.5 per cent. of the budget in reserve, because four of the PCTs in south Yorkshire have overspentthe exact figure is not known. Together with other south Yorkshire Members, I had a meeting last week with the SHA, which thought initially that there would be a 20 million overspend in those four PCTs. That figure is more likely to be between 14 million and 16 million. Everything has been honest and open. We are not hiding anything. Does my PCT like the idea of 7.5 million of its growth money coming out of next year's budget? Absolutely not. Nor do I, or anybody who works in local health care.

Michael Jabez Foster: Can my right hon. Friend work out why, if 7.5 million is overspent, there is a requirement that some trusts should offer up 2 per cent. over a number of years and some even more?

Kevin Barron: As I understand it, the calculation is made on an SHA basis. To achieve national balancing, a sum equivalent to the overspend is being held in reserve. The amount will differ in different regions. In south Yorkshire we are told it will be 2.5 per cent. I hope it is no more. When one looks at the communities for which our PCT provides services, and the high levels of health inequality, 7.5 million is no mean sum.
	Given that the sum going into reserve equates to this year's overspend, even though we do not know what the overspend is and probably will not know until the middle or end of next month, is the same thing likely to happen again in 200607? Everyone talks about the fact that PCTsand presumably hospital truststhat have run up large overspends, perhaps over years or perhaps over the past 12 months, will not be able to pay off their overspends over the next 12 months. Even if they incur no more extra spending in the next financial year, we will be debating estimates this time next year and observing that, although the overspend is down, it has not gone away. What worries me, and probably worries my primary care trust, is that, if the same situation occurs next year, it will not be a case of keeping money in reserve to balance the books. It will bite into the growth money that has been so vital to turning health care around in my area.

Andrew Lansley: In the context of the point made by the hon. Member for Hastings and Rye (Michael Jabez Foster), the right hon. Gentleman may wish to know that Surrey and Sussex SHA has called for a 3 per cent. top-slicing on its PCT allocations. John Bacon, the transitional lead for London, is taking 3 per cent top-slicing. Thames Valley SHA is taking 2.5 per cent. Why are they doing it? Because they anticipate deficits in their SHAs of more than 1 per cent. this year and probably the same next year. They are proposing, in effect, to renationalise all the growth money in those SHAs in order to start baling out deficits across the system.

Kevin Barron: I do not know exactly what is happening down here, but taking 7.5 million off Rotherham and putting it in reserveI ought to add that the PCT has been told that it will get the money back at some stagehas not taken away all the growth money. Far from it. My right hon. Friend the Minister knows, and it is probably the same for her constituents, that we are still below the national target for PCT expenditure. We still have room for growth and we will get additional money because we are below the national PCT level.
	I discussed with Ministers what the turnaround teams are doing in the PCTs that have problems of overspend. I am led to believe, and my right hon. Friend may want to correct me, that they are not just looking at the current overspend and what to do about itwe are all interested in thatbut at how it came about. How did some trusts overspend as much as 10 million, 20 million or 30 million, whereas other trusts close by are nowhere near those levels? That will be crucial for learning the lesson from the present problem.
	The Health Committee will want to study the evidence presented by the turnaround teams to find out what happened. We may want to instigate a debate at some stage about why the problems arose in different ways in different parts of the country, and to find out how we can avoid a situation in which some primary care trustsit may be a minoritywill go through some difficult times in the next few months and years. I am just pleased that we have a Government who have taken on their responsibility and funded expanding health care as they have, so that these difficult problems are not as difficult as they could be.

John Pugh: I apologise for the fact that my hon. Friend the Member for Northavon (Steve Webb) is not present. He would like to be here, but he is elsewhere working tirelessly for the public good on parliamentary business.
	As I am new to the health portfolio, I am sure that hon. Members will excuse or perhaps even welcome the relative brevity of my contribution. I could be tempted into launching a Castro-like tirade in which, having acknowledged the additional funds that the Government have put in, I damn them for disproportionate increases in administration, public relations and publicity, failure to recognise the impact of wage settlements, gold-plating the European Union working time directive, vexing hospitals with politically driven targets, and generally fomenting a culture of change and instability that makes Mao Tse Tung's permanent revolution seem a little tentative. However, that would only provoke Labour Back Benchers to point to the largesse of the Chancellor, falls in the waiting lists and the fact that the net deficit is only about 1 per cent. Instead, let us cut to the quick and have the sensible debate that the right hon. Member for Rother Valley (Mr. Barron) requires us, and prompted us, to have.
	The basic problem with the NHS is how to run a non-profit-making, demand-led service and stick to expenditure limits. That is analogous to the problems that councils will be familiar with when dealing with social services departmentsthey always overrun, and it is very difficult to manage a demand-led service effectively.
	The Government's first idea was to set targets, but reaching targets requires adequate resources. When resources are not adequate, targets are often achieved by adopting perverse methods, or displacing equally worthwhile goals. The second Government idea, which was embodied in the Healthcare Commission, is the perfectly legitimate idea of pursuing a strategy of assessing clinical outputs in relation to resource allocation. By itself that is not a bad idea, but the key question is how it is pursued. Global figures on the whole NHS are no good. They are relatively uninformative; they tell us something and they are very useful in Prime Minister's questions and so on, but they do not provide a fine-grained picture. Even at strategic health authority and regional level, they are relatively unilluminating, as there will be a lot of funds sloshing around between one cost centre and another.
	The Government appear to have pursued a policy that concentrates on individual cost centres: primary care trusts, hospitals and so on. In some senses this is a new departure, and they have done it in a way that has revealed substantial and worrying variations, and considerable deficits. The moot question for all of us is whether the issue is new and recently discovered, or whether it has previously existed in one form or another, perhaps disguised in the past by sloppy accountancy or the ability to move finance from year to year. It has certainly been disguised by extensive use of brokerage, whereby the SHA would find money for those in deficit and bail them out at the end of the year, and sometimes by plain misdescription of activity, whereby a shortage of secondary care might be dealt with by using some money allocated to primary care, which is then called secondary care.

Graham Stuart: I know that the hon. Gentleman is new to his post, but may I ask whether he is aware of the work carried out by Professor Sheena Asthana and Dr. Alex Gibson at the University of Plymouth, which has uncovered systematic underfunding in rural and relatively affluent areas, which is where the deficits are predominantly occurring? The Government's effort to blame managers is wrong. There is in fact a systemic underfunding of certain areas by the Government.

John Pugh: The hon. Gentleman takes the words out of my mouth, because the crude Government hypothesis that the problem is due to a failure of management is significantly wide of the mark. If that were the case, resignations would have to follow and heads roll, and the public would have been substantially let down. In North Staffordshire we have seen the whole trust staff resign, more or less, but we have not seen such acknowledgement anywhere else. By and large, people who fail in managing trusts seem to be recycled elsewhere in other parts of the health service, where they are often equally well paid.

Michael Jabez Foster: The hon. Gentleman seemed to suggest that a 6 per cent. minimum was somehow underfunding. How would he compare that with 3 per cent. or less, as it was under a previous Administration?

John Pugh: To be honest, I have not mentioned underfunding at any stage. I have not accused the Government of underfunding the NHS; that is not the problem. [Interruption.] Whatever the hon. Member for Beverley and Holderness (Mr. Stuart) has said, he has said. I will stick with what I wish to say.
	It seems to me that the deficits can reflect a range of factors. They can certainly reflect a lack of previous transparency. We must all acknowledge that. Some trusts have also been slow to adjust to the fact that there is a new ball game, with new rules. Things have happened, brokerage has been abolished and there has been a switch to resource-based accounting and so on. Furthermore, the system lacks transparency at present. The world is not as it seems, and the debts of some trusts are currently disguised by brokerage simply because the SHA accepts that some trusts have a Baldrick-like cunning plan to get out of their current situation. It is an odd fact that in certain areas where there are foundation trusts, it is the PCTs that seem substantially to carry the deficit.
	There is a lack of financial predictability across the piece. There is no three-year plan, as there was for local government. There is top-slicing, as various hon. Members have mentioned. Even now, the tariff for payment by results is not finalised. There is also a constant stream of initiatives. The initiative to move heart and asthma care is good in many respects, but it will have a substantial impact on acute trusts' prospects and budgets.
	There are also some bizarre rules, such as the requirement that certain amounts of work be allocated to the private sector, even where that is not financially advisable. There is a failure to recognise the true cost of new build and private finance initiative in the capital factor. There is a double whammy whereby once a trust runs up a deficit in one year, it starts with a lower budget the following year. That must be the most insane way of dealing with debt since the debtors prison was abolished. In some cases, a deficit will not be due to anything other than poor configuration, but it can also be due to additional costs that are imposed by the correct configuration, but are simply not recognised.
	What all those issues require is something I think most hon. Members would consent toa responsible causal analysis. What we have had in part is a knee-jerk blame reaction, whereby the problem is said to be poor management. It is arguable whether we can leave that causal analysis entirely to the consultants and turnaround teams. It is such people who have argued others into PFIs in the first place, and who churn around the same data as are already available. I am certainly not impressed by what turnaround teams have done in my neck of the woods, where they have, by and large, looked at the figures that the hospital already has and told it what it already knew.
	There is clearly a difference between a deficit that is accompanied by high output and more and better serviceswhat might be called a virtuous deficit, as more work is being doneand a deficit with no additional level of service, which is clearly unacceptable. The reality is, however, that in order to reduce the deficits, very few alternatives are open to people. One can reduce activity, lose staff or increase efficiency; one of those three things must be done. The requirement that each cost centre should work within its own budget embodies a relatively crude principle of rationing. That is bearable only if we know what entitlements individuals and communities have under existing provision. At the end of the day, our entitlements determine our choices.
	My great fear is that the drive for financial balance across all cost centres will ride roughshod over patient entitlements and lead to damaging reconfigurations, longer patient journeys, trusts crippled by historic debts and a whole lot of political trouble for the Labour party. A better approach, which we should favour and which is true to the NHS ethos, is not necessarily to begin with the question of how we can get existing cost centres into balance so that they can trade solvently with each other, which seems to be the question preoccupying the health service at the moment. Given the money available, we should be asking what citizens are entitled to and how we can best deliver it. We should start with the people, and local people at that, rather than with institutions. We do not have a false choice between an NHS that satisfies the auditors and an NHS that satisfies the citizenbut in the real world it does not follow that the former guarantees the latter. I urge the Secretary of State to proceed with caution, to avoid simple solutions and to recognise that even with reform, one must learn how to reform.
	I shall close by quoting the King's Fund, which has made a pertinent, relevant and on-the-ball comment:
	The increased level of deficits forecast for NHS organisations this year . . . is worryingbut not surprising. It is essential that the Government does not respond in an ad hoc way but instead introduces a system of support to enable NHS Trusts to respond to emerging financial problems flexibly.
	The key word is flexibly.

Several Hon. Members: rose

Madam Deputy Speaker: Order. I remind all hon. Members that the 10-minute limit on speeches by Back Benchers now applies.

Charlotte Atkins: In the past week, north Staffordshire communities have been left reeling by the extent of the proposed redundancies at the University Hospital of North Staffordshire Trust, which is one of 18 NHS trusts currently receiving extra support from the turnaround team to help recover its financial balance. In order to bridge the 30 million gap between income and expenditure and start to repay some of the debt, the trust plans to save around 43 million over the next two years. That is a tough task, but the new interim chief executive Anthony Sumara is probably the person to do it.
	About 70 per cent. of the trust's annual expenditure goes on pay, so it is clear that jobs must go, but the prospect of 1,000 jobs going has sent shock waves throughout north Staffordshire. Anyone with extensive experience of the hospital in the past couple of yearssadly, I have had that experienceknows that it was badly managed.

Graham Stuart: indicated dissent.

Charlotte Atkins: The hon. Gentleman may laugh, but if he had spent as much time in the hospital as I have, he would know that that was the case. The management task was not helped by dilapidated buildings on two very separate sites, but there is no excuse for weak management that has left patients waiting weeks for tests, with appointments cancelled and delayed.

Graham Stuart: I made a noise when the hon. Lady blamed NHS managers, because that is all we hear from Ministers. The problem is systemic, and Ministersnot chief executives or civil servantsmust take responsibility for the state of the NHS. The hon. Lady's constituents and others will see thousands of jobs go, and they will not think it acceptable to blame the situation on poor management when those managers are appointed through the centralised system set up by this Government.

Charlotte Atkins: I totally disagree with the hon. Gentleman, given my personal experience. While the failed previous chief executive has escaped to a plumb nursing job in the Department of Health, is it right that patients and staff should suffer cuts as a result of poor past management? Valuable and committed staff are being sacrificed to recoup the losses generated by past poor management.
	There is scope for greater efficiency. For instance, a hip replacement normally means a five-day hospital stay, and if in North Staffordshire that involves an 11-day stay, it does not take rocket science to recognise that the hospital is bound to make a loss. Unless such stays are reduced to the average for other trusts, the hospital is bound to get itself into difficulties. Improvements can and will be made by examining the use of theatres and out-patient services, rationalising the split site arrangements, using new technologies and reviewing back-office functions, but the impression remains that existing staff are paying the price for management failures that were not of their making.
	I have received numerous letterssimilar letters have appeared in the press, toopraising the friendliness and professionalism, and the caring and hard-working nature, of the staff, and I want them to be looked after. There is a plan to employ many of the people who currently occupy the 1,000 jobs in the community that are due to go, because the trend is towards community care rather than basing care on an acute hospital. I want to see a package on the scale of the Rover package to help those staff either retrain or enter other jobs in the health service. The community in north Staffordshire is very deprived, and we cannot sustain 1,000 job losses without extra help.

Adam Afriyie: Will the hon. Lady remind the House who approves the appointment of managers in NHS trusts and PCTs?

Charlotte Atkins: I do not want to talk about the past chief executive, but I believe that he was appointed by the hospital board against the advice of the strategic health authority.

Martin Horwood: Like north Staffordshire, Gloucestershire is reeling from the revealed scale of the cutsin our case, funding cuts of 20 million for the foundation trust and saving plans across the three PCTs of 30 million. Will the hon. Lady accept that at least part of the cause of the abruptness and scale of the cuts, which have left both our counties reeling, is the fact that they have occurred shortly before the start of the coming financial year? The funding formulae and mechanisms imposed by the Department of Health must therefore be largely to blame.

Charlotte Atkins: Those are short-term issues. I appreciate that the slide cannot continue in acute hospitals and PCTs, and a line must be drawn to deal with those deficits, which should be dealt with in a relatively short periodobviously, on occasions, with transitional help.
	The big issue in north Staffordshire is the rebirth of the University Hospital of North Staffordshirethe fit for the future project. The project faces some paring down, which is in keeping with the move towards community health resources rather than relying on the acute trust. It is nevertheless vital that the project goes ahead, to reduce the glaring health inequalities in north Staffordshire and help to regenerate the local economy. Despite the hospital deficit, that project must go ahead, because any uncertainty will create real problems.
	It is important that the Department should consider transitional funding, if it is necessary to get the hospital off the ground. The locality needs a new hospital, because we have possibly the most dilapidated hospital buildings anywhere in the country, so replacing them is a priority. The lack of investment in hospitals in the past is demonstrated by the fact that we are stuck with such appalling buildings, which should be replaced quickly. I want the hospital to work much more closely with PCTs, the ambulance trust and community staff.
	The Secretary of State has pointed out that deficits generally occur in wealthier areas, which are frequently bailed out by more deprived areas. That is not the case in north Staffordshire, which has significant deficits, which must be sorted out, not only in the hospital but in the PCTs. I welcome the greater transparency that is now involved. In the past, Staffordshire has frequently bailed out Shropshire. It has all been done very much under wraps. The loan has of course eventually been repaid, although no interest has been paid. Now it is clear that my own Staffordshire Moorlands primary care trust will be borrowing money, but will be paying interest that the lender will receive. What is happening is clear for all to see.

Mark Pritchard: My constituents in Shropshire would be aghast by the hon. Lady's last comment that Staffordshire has bailed out Shropshire. It is some sort of a bail-out when the Shropshire health economy is facing a 38 million deficit, meaning cuts to local hospital services.

Charlotte Atkins: I am talking about the past few years, when Staffordshire frequently bailed out Shropshire. Perhaps that was before the hon. Gentleman's time.
	Paying off the deficit is going to be very tough for Staffordshire Moorlands PCT. It will not just mean stripping out inefficiencies; there are bound to be service cuts. However, I have great faith in my PCT's leadership, who will ensure that they work closely with the community to ensure that the cuts that they have to introduce will have the least possible impact on patients.
	I very much support the Secretary of State's statement about reducing unplanned emergency admissions and saving the NHS money. My PCT has embraced that enthusiasticallyfor instance, through the anti-falls programme, but particularly by using community matrons to intervene in the community to pre-empt unplanned emergency admissions. The PCT has saved about 0.5 million by such investment in community provision. However, the avoidance of emergency admissions now attracts half the funding that it did previously, so from a financial point of view there is less incentive to invest in community provision and it is less cost-effective to do so. That will hardly encourage best practice, as the Secretary of State wants to do, and it will undermine future investment made by my PCT in preventive measures such as the anti-falls programme and the employment of health visitors and suchlike.
	Similarly, we have an ambulance service in Staffordshire which, through its superior training of paramedics and community first responders, prevents huge numbers of admissions to hospital by treating people at home. That is better for the patient and saves millions of pounds for the NHS, and it does not crowd out elective surgery at the hospital. Yet that ambulance service is threatened with merger, involving a dilution of staff skills and a reduction in their service standards. If we are serious about increasing and improving out-of-hospital care, we have to reward PCTs and ambulance trusts that are excelling in those fields. We should not merge them with other organisations that do not share their focus and delivery.
	I hope that when we come to the end of the public consultation on Wednesday 22 March, the strategic health authority and the Secretary of State will listen to the overwhelming response of people in north Staffordshire who say that they want to create a local north Staffordshire PCT and do not want a gigantic Staffordshire-wide trust. They also want an independent ambulance service working within the west midlands that would act as an exemplar to other ambulance services and help to create far better ambulance services country-wide.

Anne Milton: I should mention that I have an interest in that my husband is a doctor who is employed by a primary care trust.
	I want to talk about two things: first, the budget deficit in my PCT, Guildford and Waverley; and secondly, the implications of the deficit. All too often in this place, we end up talking about money and services and slightly lose sight of the people who ultimately suffer as a result. I agree with the right hon. Member for Rother Valley (Mr. Barron) that the NHS has become a political football. Indeed, that is what took me out of it, having worked for 25 years as a nurse, in the hope that I might change something for all its staff.
	One of the most striking things that has ever been said to me was during a conversation that I had with a doctor who worked in NHS management when I was making a speech about the NHS. He got very angry with me and said, You know, Anne, you've got this all wrong. My job isn't about making people betterit's about balancing the books. It is very sad that doctors now feel that that is their aim. Last year, Guildford and Waverley primary care trust in my constituency launched a document called, Modernising your local healthcare. It is no surprise to me that local people are cynical about that and say, Modernising local health care, probably not; balancing the books, probably yes. They feel that it is all about chucking in a bit of modernising of local health care to make everything feel better.
	Guildford and Waverley PCT is facing a budget deficit of 16.3 million. I do not doubt that its desire is to modernise health care and to improve health services for local people, but its aim is to cut its costs and to balance its books. In fact, it now has an imperative to balance its books because we are living in a very competitive climate. In Surrey, five PCTs are to be reconfigured down to one PCT. Many people are competing for many fewer jobs. There have been articles in the press and the health service journals about that. Senior managers in PCTs that are to be reconfigured tend to get the chief executive job at whatever levelstrategic health authority or PCTif they balance the books. Everybody who works in the health service, particularly in PCTs, understands that. In fairness, one cannot blame the staff for looking at it in that way. They have mortgages and bills to pay and families to look after. It is worth considering whether it is really a good thing for the Government to be reconfiguring PCTs given that that will result in an incredible loss of focus for the staff involved.
	In December 2005, the British Medical Association said in one of its briefing papers that serious questions have to be asked about where increased NHS resources are going, and that it is not a good idea to make kneejerk decisions about the reduction or closure of services in response to short-term funding problems. The Secretary of State recently said:
	Some primary care trusts are planning to close local cottage hospitals . . . But community facilities that are needed for the long term must not be lost in response to short-term budgetary pressures.

Graham Stuart: Is my hon. Friend aware that supporters of community hospitals increasingly see that statement as a sick joke?

Anne Milton: I agree with my hon. Friend. Many people view it as not only a sick joke but a desperate situation for many community hospitals throughout the country. The Secretary of State continued:
	So we will expect primary care trusts to reconsider such proposals against the principles of the White Paper.[Official Report, 30 January 2006; Vol. 442, c. 24.]
	That has yet to happen and I understand that some community hospitals have already shut because the first aim of the primary care trust is to balance the books.
	In Guildford and Waverley, several community hospitals are at risk, including Cranleigh Village hospital in my constituency. That hospital is held in much affection. The staff often live locally and it has been effective because, as many hon. Members know, people do much better and their health outcomes are better if they are looked after close to where they live, in the community, so that their local friends and relatives can visit them. Cranleigh Village hospital is so loved that a hospital trust was set up some years ago to raise money to build a new hospital. A substantial sum of money has been raised, a local benefactor has donated land and detailed planning permission has been granted. The project will go ahead, but only if community beds are provided on site. That is a condition of donating the land.
	The innovative and groundbreaking project will be put at risk should community beds in the hospital at Cranleigh close. One sometimes wonders whether we still have a national health service. I urge hon. Members to consider how often Ministers, including the Secretary of State, refer to the health service, not the national health service. The beds in Cranleigh are being kept open only by voluntary donations. The community in my constituency remains sceptical about the Government's motives when such projects are put at risk and community beds close. Many hon. Members have alluded to the complex reasons for deficits. The right hon. Member for Rother Valley spoke about inherited budget deficits, which is a problem in my constituency.
	We also have an older population and the demands and needs for health care are high. I, like many of my constituents, find it difficult when PCT board papers include statements such as, We need to manage demand or, We need to undertake less activity. Surely that means that people are getting less of the health care that they need. There are some serious problems with the funding formula in the south-east, as was mentioned earlier.
	We must take a much longer-term view because it is estimated that, in 2020, half the adult population in the south-east will be over 50.

Adam Afriyie: I recently chaired a health-care question time for the Windsor, Ascot and Maidenhead area. It was striking that the NHS trust and PCT are finding it hard to deliver services or plan ahead because the Government have failed to set the tariffs or the settlement for this year. Does my hon. Friend share my concern that, without secure future finance, it is hard for any hospital or trust to provide a decent service to patients?

Anne Milton: My hon. Friend is right. It is hard to plan, and that leaves staff in an insecure position and many patients, especially the elderly, feeling vulnerable.
	Front-line staff are experiencing incredible job insecurity and loss of morale. If one does one's best to deliver health care yet all one hears is budget cuts and posts being frozen, it is difficult to carry on and do the job. Many front-line staff are not only doing their job but covering for the posts that have been frozen in their trust. They also read stories in the newspapers that the trusts for which they workin the community or the acute sectorare not paying, for example, the bread bills because the financial position is so serious.
	I should like to say a little about those who have to carry the can for the cuts. For many people, being looked after at home is good not only for them but for their families. However, trusts that cut services or try to balance their books simply by shoving the burden on to local social services and patients' families do nobody any good. That aspect of the debate is not being properly aired. If people are looked after in their homes because community beds are closing or the trusts cannot keep people in hospital, somebodyoften families or social serviceswill have to bear the burden. We have heard nothing this evening about the problems that social services already experience through their financial constraints.
	I urge the Minister to listen carefully and not spend her summing up talking about what the Government have invested in the health service. It is about not only what you put in but what comes out. I still do not understand what is happening to all the money because, in Guildford and Waverley, nothing is coming out at the other end.

Michael Jabez Foster: I believe that it is a good idea to balance the books. We should compare the massive record investment since 1997 with the real-term cuts

Graham Stuart: Will the hon. Gentleman give way?

Michael Jabez Foster: No, because the real-term cuts during the Tory years are a fact, certainly in our area. The debate takes place in that context.
	The Labour Government have targeted the areas of greatest need, such as mine in Hastings and Rye. Year after year, we have received increases in funding, which has meant a sea change in the area that I represent.

Martin Horwood: Will the hon. Gentleman give way?

Michael Jabez Foster: I am sorry, but I shall get through my speech quickly because many hon. Members want to speak.
	I was especially excited when, six weeks ago, I received a letter from my right hon. Friend the Secretary of State to say that, in recognition of the continued challenges in Hastings, which is the 34th poorest town in Britain, there would be a boost to funding. I shall briefly quote from the letter, which stated:
	Today I am publishing a new White Paper that explains how we will tackle health inequalities to give all communities equal access to care.
	The first step is fairer funding. All PCTs are getting more money, with the biggest increases for those areas most in need. Your PCT, as one of the thirty most under-doctored PCTs, will by 2007/08 receive average funding of 1,552 . . . compared to the national average of 1,388.
	I believed that that was brilliant news. It represented almost a trebling of resources in cash terms since 1997. Unfortunately, I must tell my right hon. Friend the Minister that the euphoria was short lived. Last week, instructions arrived from the Surrey and Sussex strategic health authority to require the Hastings PCT to hand back the 500,000 that it had underspent this year. It was expected to return 3 per cent. of its planned budget for next year and 3 per cent. for the subsequent year. I do not understand those figures, given that the country overall has a funding deficit of 1 per cent. I stress that it still means an increase for the Hastings and Rother PCTs of approximately 2 per cent. or 3 per cent. in real terms, which is much more than was historically the case, but it is, none the less, a disappointment.
	I want to support the Government in their effort to rein back those health trusts that are overspending. The media often suggest that that involves cuts, but they are not cuts. It is nonsense to say that the significant extra funding that all health trusts have received is a cut. Nor am I suggesting that ever-increasing demand and new procedures and developments will ever result in a surplus of cash in the health service. They will not, and those needs will always be there.
	In Hastings and Rye, we have a very good, competent primary care trust. The House will be interested to know that that PCT and the Bexhill and Rother PCT have already pooled their senior management resources and costs. Marie Casey, the chair of the Hastings PCT, and John Barnes, who chairs the Bexhill and Rother PCT, have placed their confidence in an excellent management team that is led by Toni Wilkinson, the chief executive, to manage within the increased budgets provided. Those PCTs have done what they were asked to do. Indeed, the Hastings PCT will finish the year with about a 500,000 underspend.
	It so happens that the East Sussex Hospitals NHS Trust, our main hospitals provider, has found the going tough and has significantly overspent. However, the PCT has not bailed it out. Instead, it has insisted on stringent financial management at the hospital. The hospital trust was 5 million overspent at the beginning of this financial year and heading for a 16 million overspend. So it took on Kim Hodgson as its new chief executive. She has applied the paineven though she is a nurseand it is now likely that the hospital will finish the year in no worse a position than it was in at the beginning, and that by the end of the calendar year it will be in balance. This shows what can be done without a bail-out from the PCT.
	My PCTs have important plans for delivering the Government's agenda for locality health centres. They are working to provide three new centres in the area, and they have relied on the money that they were promised to make that possible. It will not be possible if they do not have the money that they have been promised. What we are seeing in those PCTs and in that hospital trust is gold-standard management. They acknowledge and accept the Government's belief that if fair funding is provided, as it has been, it is their duty and responsibility to manage. That is why I am so angry about what the strategic health authority is now seeking to do.
	The SHA is saying that, as the Government require it to balance its books, it wants the money back from the PCTs that have underspent this year. It also wants the PCTs to accept a massive 3 per cent. reduction in their planned spending for next year and the year after. That would mean putting all their plans on hold. I regard such management on the part of the SHA as deplorable. How can it behave in a manner that is so contrary to the intentions set out in the letter from the Secretary of State that I have just mentioned? How can it take money from the successful to give to the hopeless?
	The Under-Secretary of State, Lord Warner, wrote a letter to me that I received on 6 March. He mentioned overspending, and said:
	The reconfiguration should not be used locally to move resources from high performing areas to underperforming areas. Local managers should be ensuring that the quality of financial management in all organisations is raised to the level of the best.
	I could not agree more with what Ministers have said on this matter. They were absolutely right, and they should insist on their wishes being carried out now. The SHA is proposing to reward the bad and punish the good, but that is precisely the opposite of what Ministers were saying. If trusts believe that they can be bailed out, what message does that send to others? I know what message has been sent to my local PCT, and I certainly know what some of the GPs are saying. They are saying, Why bother? What is the point of enduring the pain if they are to be punished in this way?
	In Hastings, we have always had the problem of being a poor area in a rich region. I understand that that does create a problem, but that problem needs to be addressed by targeting the resources even more. It is also a reason why we can ill afford to lose our local PCT, because that kind of spreading of resources would occur as a consequence.
	I shall conclude by referring to the prodigal son. For anyone who has not heard the story, it was about a guy who went away and was profligate. He came back and, it is said, all was forgiven. Well, not quite. The real story of the prodigal son is that he went away, he came back, and he was indeed forgiven. But he never got his cash twice. He had spent his money and that was the end of it. He was looked after and cared for, but he never got his helping of cash twice over. I want to suggest to the Minister that that is the message here. These trusts have had their money, and they have spent it. It is important that they should not gain any benefit from overspending. That sends out the wrong message, and it is unfair to those who work hard and comply with the Government's entreaties.

Graham Stuart: We have heard an interesting series of contributions today, including that of the hon. Member for Hastings and Rye (Michael Jabez Foster), who seemed to give two speeches. One resembled a job application; the second was closer to reality. The question underlying his speech was, why did the SHA decide to top-slice by 3 per cent. his excellent local health care trust, thus calling a halt to any hope of the growth and improvement for his constituents for which he obviously devoutly wishes? The answer is that that order came from the Secretary of State; it was not dreamt up by the SHA. If Ministers have not told Back Benchers that truth, perhaps they ought to.
	The hon. Member for Staffordshire, Moorlands (Charlotte Atkins) is unfortunately no longer in her place. She made what is probably the most extraordinary speech I have heard in the Chamber. She appeared to be supporting the actions of her local health service that will lead to 1,000 job cuts. I realise the seriousness of my saying that, which is why I am extremely glad to have the support of other hon. Members. I would hesitate to say such a thing otherwise. It is astonishing for her to be in that position. She asked for a Rover-style bail-out. I think that the penny is finally beginning to drop, even among Labour Members, that despite the huge spending by the Government, there is a need for Rover-style bail-outs in parts of the NHS.
	On NHS deficits, Ministers have moved from denial to outright panic. The truth is that the NHS budget increased by 40 per cent. between 1999 and 2004. It will have tripled in cash terms, but by 200708 the budget will have increased in real terms by 75 per cent. There is increasing bewilderment not only in the House, but across the country about where the money has gone. The hon. Member for Southport (Dr. Pugh) asked where it had gone, as does everyone else. In 2004, it was leakedadmittedlyfrom the Prime Minister's strategy unit that there had been a reduction in NHS productivity of up to 20 per cent. by 2004, despite Government spending. So Labour Members might sing the praises of the vast sums that have been spent on health care, but the truth is that productivity has fallen. It was surging in the early 1990s.

Hugh Bayley: Will the hon. Gentleman give way?

Graham Stuart: I will give way to the hon. Gentleman, who I hope will address this point. Labour Members suggested that there were real-terms cuts in health budgets under the Conservatives. That is completely untrue. Perhaps the hon. Gentleman will answer the key question of whether, according to the standard measurement of productivity in the NHS, productivity has been falling under this Government. Would not that explain the waste of all this money?

Hugh Bayley: Would the hon. Gentleman care to share with the House his party's plans for increasing productivity in the national health service?

Graham Stuart: I would be delighted to do so. My hon. Friend the Member for South Cambridgeshire (Mr.Lansley) repeatedly explains to Ministerssometimes he even does it slowlythat the problem is one of centralised control, involving target setting. A further problem is the fact that 70 per cent. of the costs in local health economies are used to pay salaries and wages

Hugh Bayley: rose

Mr. Deputy Speaker: Order. The hon. Member for Beverley and Holderness (Mr. Stuart) is answering the question that the hon. Member for City of York (Hugh Bayley) has just asked. It might be a good idea if the hon. Member for City of York waited until he has completed his answer.

Graham Stuart: I am grateful to you, Mr. Deputy Speaker.
	Who controls those salary and wage levels? Whorenegotiated the GP contract? Who was it who, brilliantly, agreed to pay more for less work? Who reorganised the out-of-hours service, so that the service is now denuded across the country? Who renegotiated the consultants' contract? It was this Government. It was Ministers. It is about time that Labour Members realised that Ministers are responsible in this House and this country for the running of our health system.

Hugh Bayley: rose

Andrew Lansley: rose

Graham Stuart: I will not give way to the hon. Member for City of York now, but I will give way to my hon. Friend.

Andrew Lansley: I hesitate to stop my hon. Friend when he is in fine flow, but he might like to know, as might Labour Members, that between 199091 and 199798, hospital activity increased by 31 per cent. In the seven years after 199798, it increased by 19 per cent. If productivity had increased in the years since 1997, there would have been 1.4 million more operations in the national health service last year. [Interruption.]

Graham Stuart: I am extremely grateful to my hon. Friend. In answer to the question from Labour Members, that is devastating. Apart from giggling and making snide remarks, I ask them to reflect on what has come from this Government's unprecedented spending. During the years when the Conservatives were in power, there were real, above-inflation increases in health spending every year and improvements in productivity. If the health service had continued to improve as it did under the Conservatives, waiting lists would have been removed altogether in this country. [Laughter.] Labour Members might want to laugh and cackle like hyenas, but their Government's target-driven, centrally controlled NHS is heading for absolute crisis and catastrophe. We have only seen the beginning of the job cuts and political unrest that will be unleashed by this Government's failure in health care.
	If we examine the issue of productivity a little more, we see that this Government inherited the strongest economy in Europe when they came to power. It was Derek Scott, Tony Blair's former economic adviser, who said

Mr. Deputy Speaker: Order. The hon. Gentleman must refer to the Prime Minister in the normal way.

Graham Stuart: I apologise, Mr. Deputy Speaker. Derek Scott, who was the Prime Minister's former adviser, said;
	Gordon has frittered away the best inheritance left to any Chancellor in living memory.
	In 1997, with the strongest economy in Europe, there was an unprecedented opportunity to transform health care in this country. Let us face itthe money has gone in. Spending has increased and, perhaps, as some have argued, it took a Labour Government to do that. It is even more true, however, that it will take a Conservative Government to bring back value for money for patients; to put health care, not cost savings, at the top of the priority list; and to ensure that we return to having care close to home, which no longer appears in White Papers.
	In 2000, under the NHS plan, those of us involved in fighting for community hospitals were told, You're saved. It's okay. What has happened? More than 1,500 beds have closed in community hospitals in this country. We then had the astonishingly named document, Keeping the NHS Local. When I first came across it, I found it fascinating. I wondered whether it was a sideline, but I discovered that it was the Government's primary policy paper on health, against which everything should be measured. Members can imagine my shock when, new to this House, I found that my local services were being cut. They can imagine how that was compounded, although I was initially joyous, when the White Paper came out. A new Secretary of State was saying that no community services or facilities must close because of short-term budgetary pressures. She said at the Dispatch Box, where the Minister is currently smiling and laughing, that that should not happen. Across the country, it is happening.
	Between 1999 and 2003, spending increased by almost 30 per cent. The number of hospital treatmentsLabour Members are quick to intervene but, strangely, they are not doing so nowwent up by just 5 per cent. Ministers of this Government are grinning at that failure. Productivity has fallen and, as my hon. Friend the Member for South Cambridgeshire has said, the impact has fallen on the most vulnerable and ill in our society.
	Recently, there was the case of Mena Rising, who was terminally ill in Westbury hospital. Despite the White Paper, the local primary care trust decided that that hospital must close. At five days' notice, because it had budgets to balancelet us remember the words of the health White Paper, which, as I said earlier, people now see as a sick jokeall the patients were moved. A check was done on Mena Rising, however, to see whether her GP was wrong to say that, as she was terminally ill, she should not be moved. They could not overcome that assessment, so she was allowed to remain alone in that hospital. All the other patients were moved on a Sunday and she died on the following Thursday.
	That is the reality of new Labour's NHS. The failure to deliver value for money is a result of the failure of the Labour party to take as much care over spending as it does over the accompanying soundbites. This Government need to stop blaming managers for systemic failures that derive directly from their policy. They need to face up to the fact that never in the history of British government has so much been wasted by so few.

Howard Stoate: It gives me great pleasure to follow that tour de force.
	As probably the only practising doctor left in the Chamber, it gives me great pleasure to take part in this debate and to introduce some reality into what is a serious debate. No one is trying to downplay or belittle the overspends, which are causing significant pain in a number of constituencies throughout the country. It is important, however, to put that in context. We need to consider the enormous improvements in the health service over the past few years, which no one has yet mentioned.
	It is convenient for the Conservatives to say that money is going in and not much is coming out. As a practising GP, let me tell the House that if I see a patient with suspected cancer now, I can guarantee that that patient will be seen by a cancer specialist within two weeks of my making the decision that there might be a serious problem. If it turns out that the person does not have cancer, so much the better. Nevertheless, the waiting time, anxiety and stress for that patient and their family has been reduced. The two-week waiting time has transformed that experience.

Andrew Lansley: Will the hon. Gentleman give way?

Howard Stoate: I cannot give way, as there is very little time.
	I can now say to a person who needs a new hip, You will have that new hip within six months. It used to be one, two or three years. People were forced into the private sector. They did not want to go to the private sector, but they had no choice because little else was available unless they had private health insurance. That has been a fantastic achievement.
	The new GP contract, which has had its first full year in operation, has transformed the management of chronic diseases in this country. It has transformed care for diabetes, heart disease, strokes and transient ischaemic episodes, and soon, in the next round of GP contract changes in April, chronic kidney disease. That is transforming patients' lives. It does not necessarily appear in the statistics or on the front page of the Daily Mail, but it is transforming people's lives in a way that was never possible before.
	We talk of massive, catastrophic overspends. If the figures are correct and we turn out to have spent about 0.8 per cent. too much on the NHS, we should put that into context. It means that the average person on an average wage has ended the year with a deficit of 200. I do not believe that the average person on an average wage would feel that it was a catastrophe, a meltdown or a disaster to end the financial year with a loan of 200. It is the equivalent of my telling someone, Go out and buy yourself something for 10 and their coming back and saying It cost me 10.08. That is hardly a catastrophe, a meltdown or a disaster.
	The Government have invested record amounts and are achieving record results as a consequence. I can now say to a patient in my consulting room, I think that you should see a consultant. We can decide together which hospital would serve the patient best and I can book the appointment on my computer while the patient is still sitting in my consulting room. I can say, There is your appointment to see a named consultant in a hospital of your choice on that particular day. The hon. Member for South Cambridgeshire (Mr. Lansley) laughs, but I wonder whether that was possible under the last Government.

Andrew Lansley: rose

Howard Stoate: I will give way to the hon. Gentleman. I should like to hear what he has to say.

Andrew Lansley: I laughed because, according to the Government's own figures, in January only 13,000 direct bookings were made through choose-and-book. According to the commitment that they made, everyone would be able to book an appointment directly through choose-and-book by the end of December 2005. It just is not happening.

Howard Stoate: I assure the hon. Gentleman that it is happening. It is certainly happening in my constituency, in my practice and in my primary care trust area. Of course there are teething problems; of course it is taking longer than we thought it would take; of course there are massive difficulties with an IT system that is as enormous as the new NHS IT programme. I am not saying that the arrangements are perfect. I am not saying that the NHS has achieved nirvana, because clearly it has not. Nevertheless, it has travelled a long way.
	That is not to say that there are no issues of concern. There certainly are such issues, and I should like to raise a couple. My local hospital, which is involved in the private finance initiative, has a turnover of about 100 million, with a PFI access charge of about 18.9 million this year. Yes, it is in financial difficulties. I met the chief executive last week to discuss how that would be managed, and heard about his robust programme to keep the deficit at least to a reasonable level. It is not a crisis, but it is a matter of concern, and of course it matters to patients.
	The hospital is having to scale down some of the elective operations scheduled for this side of the end of the financial year, because in 10 months it has engaged in the amount of activity that would normally have filled 12 months. The results have been excellent, with improved efficiency and productivity, but of course budgets are stretched towards the end of the financial year, and some operations will need to be postponed until April. That is worrying for patients, but I have been assured that they will still be treated within the six-month time scale set by the Department. That is much better than anything that happened in earlier times.
	I believe that there are things that we can do to improve NHS efficiency and reduce some of the worrying overspends. I should like acute trusts and primary care trusts to work far more closely together, with regular updates and meetings to plan expenditure and activity, so that we do not see, year after year, February deficits and end-of-financial-year meltdowns and disasters that are avoidable and foreseeable, and should be a thing of the past. If the PCTs and acute trusts sat down together to plan expenditure over the year, many of those difficulties could be removed.
	There is also a need for acute trusts to work together. All too often, an acute trust that finds itself in difficulty will ignore what other trusts are doing down the road and will duplicate services, trying to increase income by concentrating on what they see as their strengths, regardless of what else is happening in the local health economy. That is inefficient, and I believe that it destabilises some areas.
	I feel that payment by results encourages hospitals to generate as much business as they can in order to stay healthy. It has encouraged some hospitals to adopt the approach that the more patients they admit, the more money they can earn. That distorts local priorities. An analysis of the impact of the system, which was introduced in 2004, found that it had led to an increase in the number of short-stay admissions to foundation hospitalsas opposed to non-foundation hospitals, which were still operating under the old block contract payment system. Between April and September 2004, the number of short-term admissions rose by an average of 24 per cent. in the 10 foundation trusts, and by only 17 per cent. in similar non-foundation trusts. Research by the Audit Commission found that overall hospital activity in foundation trusts had increased by 1 per cent., and that the number of short-stay admissions had risen by 7 per cent. Some of those hospitals are driving up activity in a way that does not necessarily reflect local health need, and could destabilise and undermine PCTs' efforts to keep their budgets under control.
	The accident and emergency waiting target may also cause problems. Because some hospitals have found it impossible, or very difficult, to discharge patients within four hours, there is an increasing tendency to admit patients. Not only does that avoid the four-hour target, it increases hospitals' income significantly. There is a driver in the system which, in some hospitals, has caused inefficiency to push up the costs to the local health economy. There is also a tendency for some hospital trusts to exaggerate the complexity of patients' illnesses, which again pushes up the tariff for the care that those patients receive.
	Those are not acute structural problems, but they should cause concern. I should like Ministersespecially when they engage in discussions with trusts and othersto think about how the distortions can be levelled out. Many of the overspends are not all that enormous, but they can build up over a period, and such levels of inefficiency in the system can cause unnecessary destabilisation.
	There are also far too many follow-up out-patient appointments; indeed, my research shows that some two thirds of all NHS out-patient appointments are follow-up appointments. I do not know what research has been done on how unnecessary they are, but my understanding and belief is that many could easily be carried out by the GP or practice nurse, and some of them are probably not even necessary. They give rise to significant cost pressures in an acute hospital setting, where many patients simply do not need to be and, frankly, do not want to be. Many would probably be happier at their GP's surgery, and if the GP feels that the problem is beyond his or her capability a referral back to the hospital would be a much more efficient use of facilities and finance.
	I shall not dwell on these issues, as other Members wish to speak in this important debate. This is not a crisis, a meltdown or a catastrophe, but it is worrying that the health service should end up with yearly deficits, despite the record amounts of money going in. It is very important for Members to reflect on the significant improvements in patient care. Patient satisfaction is rising and all GPs now have to conduct yearly independent patient satisfaction surveys in order to show the PCT that they are doing a good job. The vast majority are indeed doing a good job, and through the new pharmacy contract pharmacists are making significant improvements. Moreover, nurse practitioners and specialist nurses are making incredible improvements in health service care.
	Our patients have never had such a good health service. The Government are rightly praised for the huge efforts that they have made and the sums that they have invested in the NHS. Instead of soundbites and shouting, we should have a responsible debate that reflects the fact that a great deal of work has been done, but that does not mean that there are no concerns or issues that need to be dealt with. I shall be interested to hear the rest of this debate.

Richard Taylor: As you and the House know, Mr. Deputy Speaker, I have no party political axe to grind; my aim tonight is simply to get at the truth. It is entirely natural that the Government should minimise the scale of the deficits, saying that only a quarter of trusts are in deficit and that the projected 800 million deficit is only 1 per cent. of the total budget, but I am not at all sure that that is the true figure.
	This year200506trusts have been allowed to use brokerage, short-term loans and cost improvement programmes and, at the half-yearly point, the projected deficit was 620 million. At that time, one trust in my locality admitted to a deficit of 3.8 million; it now has to save 20 million to get into balance. Another trust admitted to a 10 million deficit; it now has to save 36 million to get into balance. The hon. Member for Guildford (Anne Milton) said that her trust has to save 16 million, yet according to its six-monthly forecast it was going to be in balance. If those examples mirror the picture across the country, the gross deficit is far greater than the 800 million that is being admitted to. We should also consider reports of the scale of redundancies in trusts such as Cornwall and North Staffordshire. Technically, the Queen Elizabeth hospital, Woolwich, is insolvent. Many Members have mentioned top-slicing at 2 to 3 per cent., but if that is to be the right answer, the figure would have to be even higher.
	What has happened to the extra money that has been invested, rightly, in the health service? The figures given to the Health Committee by the think-tank Reform were passed to the Department of Health and have not been queried. Some 3.7 billion of the extra 6.6 billion has gone automatically on cost increases. That leaves 2.9 billion, which has been spent on meeting underestimates of the cost of the new contracts, of the cost of recommendations by the National Institute for Health and Clinical Excellence, and of the cost of private finance initiatives and pensions. That leaves very little to pay for employing the extra consultants and nurses being trained, or to meet the 18-week target.
	If we could get at the truth of the real scale of the deficits, the Government would have to agree to give more time to achieve balance. It is ridiculous to try to achieve balance in precisely 12 months. The Royal College of Nursing, in a letter that I suspect that it sent to many hon. Members, stated:
	All Trusts should have the option to defer deficits for an agreed period of one to three years as agreed with the health economy where achieving in year balance will restrict choice and adversely impact service provision.
	Apart from the delay, what should we do? It is obvious what we should do. First, we need to examine the equality of funding. Some hon. Members have already mentioned work that suggests that funding is not equitable. We do not just condemn management; we examine the quality of management and see where it is good and where it is not. We ask the Department of Health not to make any more mistakes. It was admitted in a letter dated, I think, 22 February, that the Department had got the national tariff wrong. How can one calculate how to spend one's money if the tariff is wrong? We should allow time for payment by results to happen and for practice-based commissioning. We should put an embargo on further use of private independent sector treatment centres until we really knowwhen they have been evaluatedif they are value for money.
	We should put a temporary halt on PFIs. Some 60 trusts have PFIs tying up about 11 per cent. of their income. That is the first call on the income. We have had 28 reorganisations since 1982. As I keep telling the House, for goodness' sake, do not have any more reorganisations for the moment. The Government must avoid knee-jerk reactions. Top-slicing the primary care trusts is not right and neither is shifting the cost of long-term care. As for the suggestion that asthma and heart disease can be treated more in the community, doctors do not send patients to hospital for fun and patients do not go for fun. Virtually every case of asthma or heart disease that can be treated in the community is being treated in the community. When the people concerned go to hospital, they do so because they need a consultant opinion, consultant investigations, consultant treatment or intensive nursing care. I cannot imagine where the suggestion has come from. What medical advice did the Secretary of State take on that? Did she ask the royal colleges, the chief nursing officer or the chief medical officer? That sort of plan is a knee-jerk reaction.
	There is a lot that can be done. I held an Adjournment debate just last week on the logical reconfiguration of acute hospitals, because there is scope for that. I want to make it absolutely clear that I am not talking about community hospitals, which are a cost-effective way of saving acute hospitals work, but there are logical reconfigurations of acute hospitals. Let us take the example of Hartlepool, Stockton and Middlesbrough, which are within 8 miles of each other in an equilateral triangle. One cannot keep three all-singing, all-dancing hospitals with everything there, but services can be shared.
	There should be a logical review of the work force, with joined-up thinking. We should not train 30,000 extra consultants unless we can employ them and at the moment, we certainly cannot. The move to care in the community might mean that we do not need them all. Perhaps the most important thing is to have an open debate on health care rationing and on what people would be prepared to pay and what sort of NHS charges are realistic. Not very long ago, BMA News carried out a survey of its readers and 96 per cent. of doctors who responded said that health care rationing was one of the most important things that should be discussed.
	I wonder why Ministers are so scared of rationing. Concluding an article with the headline, Why rationing looms for the NHS, the health correspondent of The Independent said that rationing
	is a word, and a prospect, that health ministers dread.
	If one has a child who is afraid of the dark, one takes them up the darkened stairs and shows them that there is nothing to fear. The Government have to be treated like that. They have to be shown that the fear of health care rationing is completely irrational and that people would welcome such rationing. We must consider it because demand will simply outstrip the money available due to increased longevity and more possibilities for treatment.
	We should allow beleaguered trusts a little more time while debate continues on all these measures, which would be possible to implement. In my heart of hearts, I would like to abolish the market and go back to what I believe were the halcyon years of the NHS in the 1970s and 1980s. Sadly, that is not possible, but the market is not working at the moment. We must find out whether, with sensible changes, we can make it work.

Adrian Bailey: In a debate that concentrates on estimates and figures, it is inevitable that there is an emphasis on difficult funding areas. However, when we rightly examine such areas, it is important that we do not lose sight of the bigger picture: far from being in crisis, for the fifth year running, our health service is treating more people, reducing waiting lists and improving patient care. Funding has increased from 34 billion in 1997 and it is projected that it will be 92 billion in 200708. Yes, there are problems, but when a 70 billion budgetthe current budgetis delivered by 600 separate units, the chances of keeping each unit in financial equilibrium are slim. We must also consider the situation in the context of dramatic changes to the way in which we deliver health care and the implementation of new contracts. Such difficult and perhaps destabilising issues have caused problems, but we have an NHS funding deficit that is a tiny proportion of the whole budget and considerably less than that in 1997, when there was a much smaller NHS budget.
	The hon. Member for Beverley and Holderness (Mr. Stuart) threw out statistics on productivity that were laced with individual anecdotes. I, too, would like to compare what the NHS is like for people in my area with how it was a few years ago. My GP surgery, which is just down the road from me, has almost doubled in size. There has been a huge increase in the provision of GPs and support staff, and throughput. The surgery now has a training centre.
	I look at the two acute hospitals in my area. Russells Hall in Dudley has almost doubled in size and Sandwell hospital has a new accident and emergency department. I had personal experience of the A and E department atRussells Hall last week, when I suffered the occupational hazard of all politicians. When inserting a leaflet through a door, I was met by a quiet, yet vicious dog that not only refused to enjoy the wisdom of my leaflet, but proceeded to try to chew off the ends of my fingers. I was in and out of the accident and emergency unit at my local hospital in just over an hour. When I compare the waiting times that I experienced a few years back

Stewart Jackson: Will the hon. Gentleman give way?

Adrian Bailey: I will not give way, because I am short of time and other hon. Members wish to speak.
	We have seen a huge improvement, but I wish to take up a couple of issues. My hon. Friend the Member for Dartford (Dr. Stoate) mentioned deficits and the way in which some hospitals were managed. My local PCT has a small deficit and it puts it down almost entirely to the increase in accident and emergency admissions in hospitals, especially a huge increase in short-stay admissions as a result. I cannot believe that so many more people are having accidents or other emergencies that require short-stay admissions. There must be a problem with the management of the health care caseload in the area, which must be examined to ensure that funding meets provision more accurately than it does at present.
	I reinforce the comments made by others about top-slicing. My own local area has a history of underfunding and health problems. On all the indices, such as cancer rates, coronary heart disease, infant mortality and life expectancy, my area performs poorly, which is why it is one of the so-called spearhead PCTs. We were enthusiastic about the extra funding from the Government to address those problems, but the SHA's top-slicing arrangements mean that all the benefits that could have accrued from that extra money might be lost. I ask the Minister to ensure that the process that will be used to bring overspending trusts back into line does not penalise those PCTs in the most deprived areas. Otherwise, the whole thrust of Government policy will be blunted.
	There are problems, but they have been created in the context of an expanding health service, which is driven by people's higher aspirations. We need to deal with the problems, but we should not lose sight of the fundamental truth that the NHS is not in crisis. It is delivering a much better service for many more people than it has done historically.

David Amess: I was very interested in the various points made by the right hon. Member for Rother Valley (Mr. Barron), and I know that, as the Chairman of the Health Committee, he will ensure that it scrutinises carefully how the NHS is managed and the money is spent.
	Although the hon. Member for Wyre Forest (Dr. Taylor) says that he is non-party political, I agreed with every word of his speech on this occasion. The NHS faces one of its biggest overspends since 1948. Many trusts and PCTs are now faced with stark optionsto meet the Government's targets and create large deficits or adopt cost cutting and contractions to come in on budget.
	I am fortunate enough to represent a constituency with a PCT that has managed to break even every year since its inception, and a hospital trust that has been able to carry forward large surpluses in the present financial year. However, I appreciate that I am in a minority of Members in that respect, and I have listened carefully to what others have said about local deficits. I feel for them, and their attempts to address the issue.
	The NHS has to live within its means and the long-term solutions are, as always, to maximise productivity and ensure that extra spending brings worthwhile returns. However, it is not just for NHS managers to address those issues. As several of my hon. Friends have already said, the Government have a responsibility to ensure that their target-setting agenda does not force health organisations into debt, and that bureaucratic changes, such as the transition to payment by results, do not increase the financial uncertainties faced by many trusts and authorities.
	Why is the national health service in financial difficulty? There are various reasons, and I do not for one moment blame the Government for all of them. The Government have done good things, but I challenge them on othersfor instance, the difficulties due to the extra costs of increasing staff, the tough targets, the culture of transparency, hospital rebuilding programmes and payment by results.
	I am sure that the Minister of State, the right hon. Member for Liverpool, Wavertree (Jane Kennedy), who will respond to the debate, is enjoying every minute of it so I do not ask her to respond now to the matter that I am about to raise, but perhaps she could write to me. In 2004, Southend Hospital NHS Trust applied for foundation trust status on the basis that it would be able to remain part of the NHS, working under NHS traditions, providing treatment free at the point of delivery, and would also be able to involve more local people, hospital staff and volunteers in service delivery, but with greater freedom in the funding of health care. However, the application was turned down and, as the trust reported on 27 February, Southend hospital's hope of being licensed as an NHS foundation trust on 1 April 2006 received yet another disappointing setback.
	Like five other hospital trusts that were set to gain approval from the regulatory body, Monitor, Southend was told that there were a number of underlying errors in the new payment by results tariff issued by the Department of Health. That really depressed the staff. The chief executive of Southend hospital, David Brackenbury, described the unwelcome news as
	frustrating for everyone who has been involved in the extensive preparations necessary to become established as an NHS Foundation Trust . . . Furthermore, this delay in receiving the tariff will cause us considerable problems in setting our budgets.
	I could say much more, but I am sure that the Minister has got the message, and I would be grateful if she would write to me.
	Why do some hospitals manage to come in on budget while others fall into serious debt? Some hospitals and PCTs are managed better than othersI will not say much better. However, some suffer from much larger systemic problems, such as being in an area with a large number of hospitals, resulting in too many bureaucrats and too much administration and duplication of diagnostic facilities.
	Southend does not suffer those systemic difficulties, as it is a small unitary authority that collaborates well with other PCTs in Essex. I am delighted to tell the Minister that for the third year running, Southend Hospital NHS Trust has achieved the top, three-star, statusa significant achievement. Furthermore, it succeeded in meeting both its financial and waiting time targets, so the Minister will understand my point about the disappointment caused by the statement about the hospital's foundation trust application. The hospital's achievements are solely down to the hard-working staff, who have risen to the extra challenges presented by the Government's target-setting agenda, while managing to balance the books.
	As several Members have said, changing the structure of PCTs has caused some disquiet; it has certainly done so in Essex. Is the reorganisation of PCTs about cost saving or improved service delivery? The Government have identified efficiency savings of 15 per cent. Had cost savings not formed part of the criteria, organisations could have had considerable flexibility to tailor reconfigurations closely to local need. Linking the reforms to cost savings at a time when many PCTs are already managing deficits means that many SHAs will have no option but to reduce the number of PCTs. Such a reduction in the number of organisations would release 250 million of NHS money, but in some PCTs the push to save costs has overridden other considerations, such as maintaining local engagement. I hope that that is not what the Government intended.
	The Secretary of State announced last week that she is willing to accept full responsibility for the financial circumstances in which the NHS finds itself, and she has pledged to go ahead with market-based reforms and be judged on their success. That has been accompanied by the news that hundreds of jobs are likely to be axedwe have already heard about the announcement by the University Hospital of North Staffordshire NHS Trust that 1,000 jobs are to be cut from its 7,000-strong work force. The Secretary of State accepts that there will be more turbulence, more disquiet and more criticism, but believes that measures to improve efficiency could be made without jeopardising patient care. However, the departure of Sir Nigel Crisp smacks of his being fingered as the fall guy for the problems. The Minister of State should say more about that.
	The hon. Member for Wyre Forest (Dr. Taylor) talked about proposals to ease the cash crisis by cutting the number of emergency hospital admissions for chronic illnesses, but I wonder whether that is a sensible move. The Royal College of Nursing has acknowledged that many people with chronic conditions could be treated in the community rather than admitted to emergency units, but points out that that would require extra funding to pay for the nurses, which would still take resources, so it is not necessarily the cheaper alternative that the Government are seeking. The Government should reconsider that idea very carefully.

Paul Farrelly: The debate is timely because, as my hon. Friend and neighbour the Member for Staffordshire, Moorlands (Charlotte Atkins) has already pointed out, last week our local hospital, the University hospital of North Staffordshire, published its plans to tackle its financial deficits. I hope that the House will bear with me as I focus on the same subject, although I shall take a different tack from that taken by my hon. Friend and neighbour, even though I share her ambitions for the NHS in our area.
	Ours is, I believe, the first of the 18 so-called turnaround trusts to announce its financial recovery plan, although I understand that the Shrewsbury and Telford Hospital NHS Trust has made an announcement today. Whatever one thinks of its record, the Shropshire and Staffordshire SHA is now certainly leading the way. The cuts announced in North Staffordshire last week affecting up to 1,200 workers make gruesome reading, and they have already had a devastating effect on morale. They include 573 nurses, midwives and nursing auxiliariesone in five of all nursing staff. In total, one in six of the hospital's dedicated and hard-working staff will go if the plans go through.
	It is true that the 18 trusts singled out in the NHS hall of shame are a small minority of NHS trusts, and the projected deficit of approximately 800 million is only a small percentage of total annual spending, which hasgrown enormously for the benefit of patients everywhere in the country, but the problems exemplified by the situation at my local hospital point to an NHS that is creaking at the seamsin some places, but by no means allbecause so much change is happening all at the same time. Even if eyes have been taken off the ballamid all the change in my area, they certainly havewhat is important now is that the response to tackle the deficits must not veer out of control.
	The brutal announcement in North Staffordshire last Thursday, however, appears to provide some evidence of a system in panicor, in my patch at least, of a response calculated to cause political panic. Either way, the consequences are appalling for staff and for people's confidence in our local NHS. I am afraid to say that the document issued to staff last Thursday was a disgrace both in content and tone, whatever apologists say about the legal requirement for statutory 90-day notice of redundancy.
	The document was predicated on the fact that we must save 43 million over two yearsto put it crudely, every 1 million means that 30 jobs will go. However, we are talking about a hospital, not a business going bankrupt, and that is no way to secure the good will of staff, which is the basis on which much of the NHS operates. Staff representatives from Unison, the Royal College of Nursing and other trade unions are rightly up in arms because, in many respects, the hospital was allowed to drift in a relatively short period by its board, by the SHA, whose chief executive was replaced last autumn and, ultimately, by the NHS executive. Like my right hon. Friend the Member for Rother Valley (Mr. Barron), I am certainly not a softy or an apologist for poor management by the hospital itself.
	At a time of immense change and huge investment, the hospital was allowed the luxury of letting its former chief executive, David Crowley, serve 13 months' notice before leaving for personal reasons. The NHS is not a business, but it needs to be run to the exacting standards demanded elsewhere, and I complained that that symptomatic drift would not be acceptable in other organisations. After 13 months, in August last year, the hospital appointed only an acting chief executive, Peter Blythin, who was shifted in January, with the obligatory warm words, to another part of the NHS. In the meantime, the wake-up call came loud and clear last November, when the trust announced a doubling to 18 million of its predicted deficit for the current financial year. The bell tolled deafeningly with the resignation of the chairman and all the non-executive directors only three days before Christmasjust the sort of festive present that people do not want.
	Since then, local MPs have tried to get to the bottom of the hospital's 18 million deficit. As late as mid-February, at a meeting in Parliament, the SHA could not provide us with all the details and assumptions that we needed, but they are crucial, given the vagaries of NHS accounting. It promised to do so, but out of the blue came last Thursday's news: 43 million of savings are now planned over two years, with calamitous consequences for staff. Despite those consequences, the statement and plan were issued on no higher authorisation than that of the hospital's acting chief executive. They were not issued on the authorisation of the SHA board or, as far as I am aware, the Department of Health.

Mark Pritchard: Will the hon. Gentleman give way?

Paul Farrelly: I am afraid not, because the hon. Gentleman intervened earlier, and other hon. Members wish to speak.
	The so-called NHS turnaround team consists of one man from Deloitte, who only got his feet under the table last Monday, so he has not had any input. When I asked what was the point of the turnaround man, the reply was, Good question. The purpose of my gnashing of teeth is to make the point that the process is hardly well stewarded. At times there is a vacuum of governance, accountability and control. I do not want to bog the House down with too much detail, but some is necessary to illustrate the impact on the deficits in my local area of different policies changing at the same time.
	On Friday I was finally provided with the first draft ofthe hospital's financial recovery plan, dated 18 Januarytwo months out of date, but a first faltering step on the road to accountability. It is clear that for   some time the hospital was allowed to employ accounting staff who found it difficult to recognise basic accounting principles. For example, one does not make up for recurring overspends by using the budget for one-off items. It is clear, too, that there is a cosiness among NHS accountants locally. The hospital did not bill PCTs for extra work, as it did not want to embarrass them and force them into deficit, and it knew that they could not pay. Unfortunately, the numbers have to add up for big payments on private finance initiative projects such as our new hospital, so that eventually leads to a brick wall.
	We need rigorous accounting, not because the NHS is a business, but because we need to know what everything costs so that the taxpayer can obtain value for money. In the hospital's predicted deficit, some items stand out like a sore thumb. For example, there are 4.2 million of unfunded costs for the new consultants' contract, the working time directive and Agenda for Change. In addition, 7.2 million so far this year and 4.2 million next year have been earmarked for the new policy of payment by results. In many respects, those are unknown, unintended or poorly predicted consequences of policy change. The new chief executive has acknowledged that much of the recruitment that has been undertaken is in line with national targets, but we want to know exactly how much.
	Clearly, I agree with my right hon. Friend the Member for Rother Valley and other hon. Members that we must know not just what we spend in the NHS, but how well we spend it and what everything costs. In North Staffordshire and elsewhere, the financial recovery plan does not seek to restore finances just to an even keel. The requirement is that in the following year, trusts must recover the underlying deficit, plus an element of the deficit carried forward from the previous year. That is a painful incentive not to get into deficit in the first place and a powerful signal, but where recognisable failures have occurred in the NHS system at a time of great change, it is too brutal in its effects now.
	In North Staffordshire, some of the vagaries of the modelling, particularly with payment by results, may yet lead us to predict another 20 million of deficit. Staff and patients in areas such as north Staffordshire, which are already underprivileged, should not bear the pain of that brutality. The response must be managed and planned; it should not cause chaos, run amok or be out of control.

John Hemming: A lot of good points have been made today, particularly by the hon. Member for Wyre Forest (Dr. Taylor). He and the hon. Member for Newcastle-under-Lyme (Paul Farrelly) made the same key point that a lot of trusts bill one another within the health economy, so there is a risk that deficits are concealed for some time. It is very difficult to pin down what the deficits are, and sometimes people do not find out until the end of the year.
	A lot of the problems were predicted, which is backed up by the evidence. I shall quote from Early lessons from payment by resultsa report produced by the Audit Commission in October 2005 that one would expect the Minister to have read. It says:
	There are valid concerns that the level of risk inherent in the current policy design, particularly given the pace of implementation and the size of the change is too great.
	In other words, we may not be in meltdown now, but if we keep going in the same way, we are likely to be in meltdown.
	In the current financial year, about 8 billion is dealt with by what is called payment by results, but it is actually a transactional fee, not a market-based system. So Woolwich hospital's underlying costs are higher, because it cannot pay its tax bill and because its PFI costs are so high, but from the health service's point of view, the hospital cannot be shut down, because those costs must still be paidso chaos ensues. We have chaos at the centre.
	We have had a triple whammy, whereby well-managed Peter is being robbed to pay badly managed Paul. Eastern Birmingham PCT, which covers my constituency, is very well managedit controls things very effectivelybut it has been hit by three things within six weeks of the start of the financial year. First, it has been hit by the phasing out of the purchaser protection adjustment, to which hon. Members alluded earlier. Secondly, it has been hit by top slicing. Although we do not know the final top-slicing figures, they vary nationally between 1.5 per cent. and the 3 per cent. figure that is often quoted. Some people argue that that at least gives them a bit of money to deal with the chaos created by Government policy. Thirdly, we do not know what the tariff will be.
	There is an argument that, if anything should be top-sliced, it should be the tariff, because that is where the real danger lies. There is a good argument for a scheme whereby people aim for a 3.2 per cent increase for non-elective surgery, and if people go above that, transactionally, it is only 50 per cent. of the cost and if they go below it, transactionally, it is only 50 per cent. of the benefit. There is a substantially stronger argument that that figure should be reduced, because it is very clear that the current chaosas I say, it is not meltdown, but it is likely to turn into meltdownis caused by too rapid an implementation of the process. If the speed of implementation were reduced, we would have a chance of people managing. The hon. Member for Dartford (Dr. Stoate) made the point that we want to plan expenditure. With payment by resultsor transactional paymentpeople cannot plan such things.
	Let us take the situation that we are in. We have deficits all over the place and we are not quite sure what they are. We will go further down a route that will create more and more deficits. Suddenly, we decide that we will take the money off the PCTs. We are top slicing some of their money. We are removing the purchaser protection adjustment from many of them. We are not telling them what they have to spend in the next financial year, which starts in a couple of weeks. They do not know the cost.
	What do we do if we want to create total chaos? We sack all the senior managers and tell them that they must re-apply for their jobs. That is really clever. For proper financial accounting, the deficit at the end of the financial year must be predicted. If accounting staff are told that they will not have a job if they predict a figure that is in deficit, of course no deficit will be predicted. Suddenly we find that PCTs have been merged and there are massive deficits all over the place, beyond the amount top-sliced by the PCTs. What do we do?
	We encounter a further problem, which was raised by the Royal College of Nursing. If someone is made redundant, their redundancy pay must be included in the accounts for that year, which is why there is such a big rush to make people redundant. If cost savings have to be made all in one year, it is difficult to find savings, so more people are made redundant than need to be.
	We are caught up in a horrible administrative mess. The Prime Minister said that every time he reformed something, he wished later that he had gone a bit further. When everything in the health service settles down, we will look back and think, No, we did that a little too fast. There is far too much change. The well organised managers who can add up are reeling with the pace of change, and we get more and more change.
	We should look for a couple of things from the Government. First, they should stop reorganising the primary care trusts. They will never get anywhere if they tell all the people who are responsible for dealing with the tight management that they are to be sacked and will have to re-apply for their jobs. That will create chaos. Secondly, the Government should review the rise from 8 billion to 22 billion. I know that they are constrained to do it for the foundation trusts but it is clear that the Audit Commission views that as causing a massive problem. Thirdly, the Government should listen to the points made by the RCN, especially about timing. If everything is done in one year, the result is total misery. We must remember that our concern is with the patientsthe people who need that health care. If there is no nurse or doctor to treat them, they do not get treatment. Action is needed from the Government to stop pushing us down that route.

Hugh Bayley: Selby and York faces the most severe primary care trust deficit in the north of England, and it is not a consequence of underfunding. This year the PCT will receive 307 million. Three years ago it received 199 million. That is an increase of 108 million a year, about 2 million a week, 300,000 a day extra for the NHS or about 470 a year extra for each person in the catchment area. The extra spending is being used to buy more treatment for more patients. It is saving lives and reducing waiting times for treatment.
	The problem that the PCT faces is not underfunding, but poor management of the fastest growth in NHS spending in the history of the NHS. That view is shared by local cliniciansGPs have made similar comments to meand by managers in the health service. Nationally, the deficit is projected at 800 million or roughly 1 per cent. of NHS spending. That, perhaps, is not a huge problem when the NHS budget is due to increase by some 6 per cent. above inflation this year.
	But 1 per cent. is the average, and averages can be misleading. If my head is in the fire and my feet are in an ice bucket, my average temperature is probably fairly good, but that would not make me comfortable. In Selby and York we will be extremely uncomfortable because of the size of the deficit. The end of year deficit is about 24 million or about 8 per cent. of expenditure.
	Despite the growth in this year's allocation, the PCT will need to cut 21.5 million if it is to break even in the forthcoming year. That will be painful. Already the PCT has cut the hours of the NHS walk-in centre in York and reduced the night-time GP cover between the hours of midnight and 8 am to just a single doctor for the 270,000 in the area. I am afraid that worse is to follow: the hospital will need to cut excess bed daysthat is to say, to discharge patients earlierand it may end up ending or limiting treatment for some non-life-threatening conditions. It could well be forced, as in Staffordshire, to make staff redundant, and GPs will need to change their referral rates if the deficit is to be brought into balance.
	The real problem that we face in Selby and York is that under the Government's financial rules, the PCT does not need only to reduce expenditure in the forthcoming year by 21.5 million to bring its budget into balance. It will be required to make savings of about 45 million, first to break even, and secondly, to repay last year's 23.5 million overspend. If a 45 million cut were actually required to be made in Selby and York, the results would be catastrophic, as it would mean a cut of some 15 per cent. in expenditure. We could be left with little more than an emergency service.
	I ask the Government to give Selby and York PCT some additional time to repay the accumulated deficit. I am not asking for a blank cheque. The Government need to know that the bad management that led to the overspend has ended. The Department of Health has put its turnaround manager into the PCT, and the PCT has already clawed back the deficit from a predicted end- of-year shortfall of 32 million to 23 million. My question to the Minister is: when the Department is satisfied that the PCT budget is back in balance, will it extend the time scale for clearing the accumulated deficit? If 45 million had to be saved in the forthcoming year, a postcode lottery would be created in our area compared to neighbouring areas. NHS treatments for patients in Selby and York would be based not on objective need, but on the PCT's ability to pay.
	There is relatively little further time for this debate. I challenged the hon. Member for Beverley and Holderness (Mr. Stuart) to set out ideas for how his party would increase productivity for the national health service. I am afraid to say that he flannelled, but I have some specific proposals to make. First, much of the additional money for the NHS has been spent on increased remuneration for doctors and other health service staff. Much of it has been earned and is deserved, but as other hon. Members have made clear, the increase in pay has not been matched by an increase in activity or the number of treatments for patients. I recommend that the Government publish data drawn from the hospital episode statistics on the activity ratesthe number of patients treatedof each consultant. Those rates vary enormously from consultant to consultant. The Government should change the consultant merit award system so that additional awards are tied to improved productivity, ensuring that it is the doctors who treat greater numbers of patients successfully who get the awards.
	Secondly, spending on drugs has spiralled. Hitherto, under the pharmaceutical price regulation scheme, the Government have controlled pharmaceutical company profits, not prices. Given the very high price of some new drugs that are being introduced, however, I believe that the Government now need to control both. Herceptin, for instance, costs 21,500 per patient per year, and it is being provided on the NHS even though it is a drug that has not been licensed for general use among cancer patients. That will add 0.5 million to Selby and York PCT's costs in the forthcoming year0.5 million less for it to spend on other treatments, such as hip replacement, which is a proven treatment. I ask the Government to look at the question of price regulation as well as profit regulation for the pharmaceutical industry.
	Thirdly, I believe that the National Institute for Health and Clinical Excellence should be asked to evaluate existing health technologies and not just new technologies. When it publishes guidelines, those guidelines should be followed. For instance, on hip replacement, it has recommended the general use of the Charnley prosthesis, which would save money and produce better outcomes if it were to become standard.
	I agree with the hon. Member for Wyre Forest (Dr. Taylor) about two matters. First, once PCTs and trusts that are in the same difficult position as Selby and York have stabilised the overspend, they need time to pay back the accumulated deficit. Secondly, he is right to raise the issue of rationing, without which there could be a feast in parts of the NHS and a famine in others. During the second world war, we introduced rationing to ensure that everybody had access to their necessary diet. We must engage with the rationing debate, as people are doing in other countries. If we do not do so, we will face the problems of variable patterns of health expenditure and variable levels of health care across the country.

Laura Moffatt: I promise faithfully to finish before 9.30 pm, Mr. Deputy Speaker, and I am deeply grateful for the opportunity briefly to participate in this debate. I am pleased to follow my hon. Friend the Member for City of York (Hugh Bayley), whose reasoned arguments about how deficits occur were in marked contrast to some of the contributions from Opposition MembersI began to lose the will to live given some of the nonsense that they came out with.
	Most hon. Members have to spend time considering these issues. That certainly applies to me because the acute trust that covers my constituents, who desperately need care, has the mother and father of a deficit. I have attempted to work with the acute trust for many years to try and ensure that it delivers a good service for my constituents. I understand that we should concentrate on the issue of deficits, but the matter is about getting the best care for our constituents, and I have no doubt that poor financial management often goes hand in hand with poor clinical outcomes.
	Surrey and Sussex Healthcare NHS Trust is at the last chance saloon, and we must get things straight so that it delivers health care properly. The turnaround team has been called in, a public interest report has been produced and we are beginning to know exactly where all the money went. Some hon. Members have said that deficits are caused by one or two issues, but that is just not true. In my area, for example, we have examined the use of agency staff. It is difficult for a trust to recruit when it is unattractive to staff, and we need to assist such trusts.
	I have noticed what has not been at the top of the agenda in this debate, although hon. Members have rightly raised examples of trusts that have maintained financial order and have delivered an excellent service. In my area, Crawley PCT has provided a fantastic service under budget for the fourth year, and it has picked up all the community services that were so poorly developed in 1997it has done an excellent job. The Sussex Partnership Trust looks after people with learning disabilities and mental health problems. I know that it is in a challenging financial position, but it is delivering a new hospital in my area. That is not top news in this debate, and all we have heard about are crises and disasters, but that is not the case, and I make that point as an MP who represents one of the areas with the greatest difficulties.
	My PCT wants to ensure that the acute trust delivers, because it understands that its patients and those of the acute trust are the same people and that it must work with the acute trust to make sure that that happens. Getting that trust into order is our first priority, and I desperately hope that the debate will be very different for me this time next year.

Andrew Lansley: I am glad to follow the hon. Member for Crawley (Laura Moffatt), who illustrates one of the reasons why things have gone so badly wrongbecause prior to the 2001 election, she and the right hon. Member for Darlington (Mr. Milburn) got together to offset the possibility of hospital reconfiguration in the Royal Surrey hospital. I have been to that hospital; I talked to its chief executive last year. If she and the right hon. Gentleman had not intervened, it would have saved 10 million a year and it would have been possible for it to have survived financially, whereas at the moment it is in crisis mode.

Crispin Blunt: My hon. Friend will be interested to know that I have calculated that the cost of general elections in the constituency of Crawley is about 20 million.

Andrew Lansley: I am grateful to my hon. Friend.

Laura Moffatt: rose

Andrew Lansley: Perhaps the hon. Lady would like to explain, because she did not get much time to speak. If hospital services in Crawley disappear, it will be because at an earlier point she was more interested in saving her political skin than in the services provided by that hospital.

Laura Moffatt: I am deeply grateful to the hon. Gentleman for giving way, but not because I believe that I have anything to answer formy constituents know very well what I was fighting for. I am intervening on his behalf because he is talking about the wrong hospital, which many of my constituents will find most amusing.

Andrew Lansley: I went to Crawley and to Reigate prior to the last election, and I have been to the East Surrey hospital. I remember the conversation exactly. The hon. Lady has to deal with the point that my hon. Friend the Member for Reigate (Mr. Blunt) made. Instead of making cheap shots, she might contemplate the expense that she has caused her constituents.
	With one or two unhappy exceptions, it has been a good and important debate, and I congratulate the right hon. Member for Rother Valley (Mr. Barron) on securing it. It comes at precisely the right moment. That was reflected not least in the contributions by Government Back Benchers, who displayed an attitude that was not present, by and large, in mid-November, when we initiated a debate in our own time on deficits. We said then that we believed that 1 billion of gross deficits and several hundred million pounds of net deficits were in prospect this year. The Secretary of State came to that debate and said, in effect, that recovery plans were in place and that it was going to better this year than last year.
	Frankly, the Government have been, and remain, in denial. On 6 December, in front of the Health Committee, the Secretary of State said:
	We believe that by managing this very closely we will get the net overall deficit back to around 250 million at the end of this year and we will, at the very least, get back to balance by the end of next year.
	One has to wonder what world she was living in at that point, as at about the same time she admitted that the net deficit was rising to 620 million. We now know, although the Government still will not admit it, that subsequent forecasts by strategic health authorities add up to some 755 million. There are some very serious deficits in several trusts, but there are also deficits across a much larger number of trusts. Our latest estimate from board papers suggests that more than 139 trusts are experiencing deficits. It is a system-wide problem.
	The right hon. Member for Rother Valley was right to say that we know what the NHS spends, but we do not know what it costs. The system has to be open and transparent. He has not heard from me, and he will not hear from me, the idea that we should go back to the bad old days of everybody covering everything up. However, he should talk to his Front-Bench colleagues who, far from pursuing a direction of openness and reform, are, through the proposal that primary care trusts should top-slice allocations, moving in precisely the opposite direction. Contrary to shifting the balance of power, they are taking control of the budgets. The Government will renationalise much of the growth money, which will then be spread around the system to try to obscure the financial consequences of necessary reform.
	The hon. Member for Birmingham, Yardley (John Hemming) understands such matters, but reached the wrong conclusion about what is required. It is necessary not to delay the structure of reform, but to complete it consistently. One of the central problems is not too many changes at onceif they were all mutually reinforcing because a clear strategy existed, managers and others in the NHS would understand and accept them. However, they find constant, mutually inconsistent changes impossible to tackle. For example, how is it possible for the chief executive of the NHS to say one thing about the future structure of PCTs and their functionsthat they are commissioning, not provider bodiesat the end of July, yet, two months later, they become provider bodies again? The same is happening to allocations. Contrary actions will not deliver successful reform.
	I have every sympathy for the position of the hon. Member for City of York (Hugh Bayley), which requires reform. I suspect that he believes in the structure of reform and that we need devolved decision making and the provider trusts to be held to account for their productivity. The consultants' contract did not achieve that. Simon Stevens, who was special adviser at No. 10 at the time, subsequently admitted that the contracts were negotiated without building in productivity. Provider trusts, like foundation hospitals, should have the freedom to manage their costs more effectively. The Government's imposing of costs lies at the heart of much of the problem.
	There is a 7 per cent. increase in costs on the tariff this year compared with last year. Is it any wonder that the hospitals that receive increases in cash resources find that most of it goes straight out of the door? The tariff takes no account of the impact of the working time directive. The 7 per cent. includes nothing for the costs of implementing the NHS programme for IT, as if hospitals paid nothing for that. It also contains nothing directly for implementing waiting time targets.
	I have asked Ministers which part of the tariff for next year reflects the Government's proposal to move towards 18-week waiting times. I am sure that the Minister has included something in her speech about that. However, I have also received replies to questions that show that, next year, the Government estimate that the move will cost 1 billion, yet that is not included in the tariff. Where, therefore, will those costs be met?
	We heard conflicting and contrasting speeches about the circumstances at the University hospital of North Staffordshire. I shall not comment on that except to say that a central question for the hon. Members for Newcastle-under-Lyme (Paul Farrelly) and for Staffordshire, Moorlands (Charlotte Atkins) is how the University hospital of North Staffordshire can possibly afford rebuilding. That can happen through only two means. Either the tariffthe payment by resultsadjusts in future to reflect the costs of building new hospitals and providing new services, or hospitals cut back their activities so dramatically that they are deemed affordable by the Government and Monitor. Clearly, the University hospital of North Staffordshire is moving in the latter direction. It must do that because the Government are telling us nothing about the former possibility.
	The operating rule book for 200607 was published at the end of January and it stated that the Government would shortly publish new affordability criteria for PFI projects. That has not happened, just as we do not know what will happen to the tariff after the end of this year. We discussed the possibility of marginal pricing Upstairs in Committee. Time and again, I said that, if the NHS has capacity and primary care trusts have patients who need treating but constrained budgets, one might at least allow for the possibility that they could reach agreement between themselves about marginal pricing of additional capacity towards the end of the year for treating those patients.
	The hon. Member for Dartford (Dr. Stoate) appears to consider it reasonable that Darent Valley hospital should spend 10 months treating patients over trade and then stop. That is not a sensible approach.

Howard Stoate: Will the hon. Gentleman give way?

Andrew Lansley: No, I do not have much time. Also, in the course of his 10 minutes, the hon. Gentleman used as many words as most people would use in 20.
	I want the Minister to accept reality. Up to now, the Government have refused to respond to freedom of information requests for the month nine and month 10 forecasts of the strategic health authorities. Will the Minister tell us what their forecast estimate is? Will she also be clear about how the SHAs can possibly move from their present position to system balance within the next year, in the light of the way in which resource accounting works? The present structure dictates that if an organisation consumes its resources in the first year of a three-year public expenditure round, it has consumed in advance the resources that would otherwise have been available to it for the following year. That is understandable in theory, but it is going to be disastrous in practice.
	The Government are going to cover many of the deficits. Let us face it, they have increased their departmental expenditure limit by 112 million for this purpose. They will also add about 116 million by underspending on their central programmes. Procurement on the connecting for health programme is slow, which gives them another 200 million, and the end-year flexibility will give them another 200 million. They were lucky last year, in that a gross error in the calculations of the NHS litigation authority meant that they had hundreds of millions to spare. That is not going to happen this year; the contingent liabilities on that are going up. The Government can cover deficits in regard to the departmental expenditure limit this yearthe question is, will they, and what will they do next year to help trusts to achieve these ends?
	There is a better way forward. It would mean that demand management could not be achieved by manipulating the tariff and that it would have to be achieved by giving genuine budget control to general practitioners through the reintroduction of GP fundholding in a form that allowed the care of patients in the community to be managed by those who have a responsibility both for the clinical care of their patients and for the budgetary consequences of that. This would require genuine freedoms. I suspect that, at the end of the year, we will find thatcontrary to the prediction of the Royal College of Nursingfoundation trusts will deliver a far better outcome than other NHS trusts in terms of finances. This is a condemnation of the performance management system in the Department of Health.
	We do not want to see primary care trusts top-slicing, a return to cash brokeragewhich is in fact happeningor short-term measures that are to the long-term detriment of the NHS, including the closure of intermediate care beds in community hospitals and the sacking of staff. A year ago, the staff were the heroesthe Government were cheering as they headed towards their waiting time targets, but now, in too many places, they are going to suffer the consequences of the Government saying, Balance your books, and don't worry about the waiting time targets.
	That is completely contrary to what the then Health Minister, the right hon. Member for Barrow and Furness (Mr. Hutton), was telling the House almost exactly a year ago. He said that people were always forecasting deficits at this time of year, but that things always turned out all right in the end. Either that showed a lamentable failure to understand what was going onwhich has continued for monthsor he was simply focusing on the general election and the waiting time targets, and to hell with the financial consequences after the year end. I do not know which it was, to be honest, but this must not happen again.
	Given the present resource constraintsastonishing, despite the 9.6 per cent. cash increasethe Government cannot carry on trying to achieve waiting time targets while loading costs, pressures and change on to the NHS in the way that they are now doing. At the moment, the tariff for next year promises a 6.5 per cent. increase in costs. Hospitals are being told that they will receive a 1.5 per cent. increase in tariff. The squeeze on hospitals will be dramatic.
	The Government say that everything is to be looked after in the community. Well, Labour Members might like to have a look at the Department of Health's annual report. The number of health visitors went down between 1998 and 2003, and the number of district nurses also went down during that period. The resources in the community are simply not there, and until they are there cutting back the hospitals will be dangerous for patients. It would be far better for the Government to be realistic about this, to give GPs the opportunity to manage their budgets on behalf of the patients, and to give the professionals throughout the whole of the NHS the freedom to deliver services for patients, and the budgets to do the job.

Jane Kennedy: I join hon. Members in complimenting my right hon. Friend the Member for Rother Valley (Mr. Barron) on securing this debate, which has had some thoughtful contributions. I appreciate his great experience as a former shadow health spokesman, and well remember working with him in opposition when the health service was very different from the one we know now.
	Back-Bench scrutiny of the searching variety that we have heard today is the most testing of Ministers and deserves the most thoughtful response. I will try to give that. I wish to cover three main areas. I cannot guarantee that the whole of my response will be completely thoughtfulone or two contributions merited something lessbut I will try.
	The hon. Member for South Cambridgeshire (Mr. Lansley) had an interesting column in last week's Health Service Journal, which I commend to the House. The title was, Stop focusing on the size of the deficit and start looking forward to creating a stronger financial framework. I echo that. I will not quote him selectively, because he is also critical, and we need to consider some of the criticism. He says:
	Payment by Results is essential.
	He continues:
	Accumulated deficits cannot be written off,
	as that would send the wrong signals. He then goes on to criticise what he describes as top-slicing. I will come to that in a moment.
	My right hon. Friend the Member for Rother Valley rightly pointed out that the NHS budget has doubled since 1997 and will have almost trebled by 2008 to more than 92 billion. It is right that we examine where the extra resources have gone and the way in which those resources are being used. The extra resources have helped to deliver a transformation of health services. It is important that the House does not lose sight of that. My hon. Friends the Members for West Bromwich, West (Mr. Bailey), for Dartford (Dr. Stoate), for City of York (Hugh Bayley) and for Crawley (Laura Moffatt) recognise that, as do a number of others.
	It would take too much time to record all the improvements that we have seen. In 1997, however, it is fair to say that almost 300,000 people were waiting more than 15 months for their operations. Now, no one waits more than six months, and the average is about eight weeks.

Peter Bone: rose

Jane Kennedy: The hon. Gentleman has not been in for the debate, and I would ask hon. Members to allow me to reply to the many points that have been made.
	I take on board the comments of my hon. Friend the Member for Dartford about accident and emergency targets and I agree with what he said about follow-up appointments. On the point raised by my hon. Friend the Member for Staffordshire, Moorlands (Charlotte Atkins), ambulances are reaching more patients more quickly than ever before, and not just in Staffordshire. She has repeatedly said how important the structure of the ambulance service is in Staffordshire. Ambulance services are extending the range of care that they provide to transform patients' experience and improve efficiency.
	Notwithstanding the comments of the hon. Member for Wyre Forest (Dr. Taylor), we have begun to improve the lives of 17 million patients suffering from long-term conditions such as diabetes, mental health problems and coronary heart disease. Those improvements have been enabled by innovation and new treatment methods, but have largely been delivered in the community through improvements to general practice and general practitioners' services. It is true that we have thousands of extra clinicians throughout the country, old buildings are being replaced with new hospitals or surgeries, and new ambulance stations, ambulances and equipment are being provided. We are upgrading the NHS's IT systems with the largest civilian IT project in the world.
	The increased spending will be backed up by key reformspayment by results, new work force contracts, PCT commissioning, foundation trusts, independent inspection and regulation and an efficiency plan to deliver better value for money. In addition, we have made significant investments in pay reform for NHS staff. The hon. Member for Mid-Sussex (Mr. Soames) raised the issue of costs. I do not apologise for addressing the scandal of low pay in the health service.

Peter Lilley: Will the Minister give way?

Jane Kennedy: Perhaps the right hon. Gentleman will allow me to continue. I beg his pardon, but I did not see him during the debate[Hon. Members: He was here.] I am sorry. I will give way.

Peter Lilley: I am extremely grateful.
	The Minister has not mentioned deficits so far. I asked the Library about the cause of the deficits and was told that 21 per cent. of the increased expenditure last year went on pensions. I was also told that, according to the British Medical Association, consultants' pensions would rise by 24 per cent. and GPs' pensions by 56 per cent. because of the new contracts. Is that a wise and fair use of money when the Government are refusing to do anything about the pensions of those who have been misled and awarded them by the ombudsman?

Jane Kennedy: I believe that it is an appropriate way of proceeding with pay reform. We negotiated the arrangements on the clear understanding that the investment was in return for reform. The new contracts for NHS staff are designed to support service improvement, to deliver real benefits for patients and the service and to improve the working lives of NHS staff. The issue was raised by the hon. Members for Mid-Sussex, for Beverley and Holderness (Mr. Stuart) and for Southend, West (Mr. Amess). I will look into the matters raised by the hon. Member for Southend, West about his local hospital and its application for foundation trust status and write to him if he will allow me to do so.

Andrew Lansley: What about the tariff?

Jane Kennedy: I shall come to that in a moment.
	Most NHS organisations are delivering high-quality patient services and balancing the books. The hon. Member for Southport (Dr. Pugh) mentioned Castro and Mao Tse Tung in one breath, which impressed no Labour Members, or at least very few, but he also said that it was very difficult to manage a demand-led service. That is a typical comment from a Liberal Democrat: the Liberal Democrats find it very hard to make decisions that might prove difficult to handle and unpopular locally. I can tell him that the NHS does manage a demand-led service in large part, and does it very well.

Martin Horwood: Will the Minister give way?

Jane Kennedy: If the hon. Gentleman will allow me, I want to deal with the deficit. While it is small in relation to total expenditure, it is unacceptable and must be eliminated. The majority of the NHS is living within its means and delivering on target, but there is much more that some parts of it can do to eliminate inefficiencies and improve productivity.
	Let us take the example of University Hospital of North Staffordshire NHS Trust. In 1997, the trust had just under 3,900 staff. In September 2004, there were slightly more than 5,100. The number increased by 1,232, more than a third. I have observed statements from North Staffordshire with some concern, but let me tell my hon. Friends the Member for Newcastle-under-Lyme (Paul Farrelly) and for Staffordshire, Moorlands (Charlotte Atkins) what the trust is saying. It has benchmarked its work force costs against those of similar trusts and they were the highest for all staff groups except nursing staff, for whom they were the second highest. It will aim to reduce its work force costs towards the average for similar trusts.
	I realise that the issue of 1,000 redundancy notices is cause for concern and I appreciate the impact on morale. Nevertheless, I think that the steps that the trust is taking to restore its financial balance are worthy of support, especially where they will not worsen patient services and may even improve them in the long run. Certainly that is the intention.
	I am conscious of how quickly time passes. Our aim is to restore financial balance in the NHS by the end of 200607, and we have introduced a series of measures to achieve that. Achieving financial balance is not a book-keeping exercise; it is essential to the delivery of sustainable improvement in the future. As well as providing additional investment, we have increased the transparency of financial reporting so that financial problems are exposed and we can deal with them. It is true that we have brought this about by shining a light on deficits. Let me be clear about why we have introduced payment by results. It is a fair and transparent system for paying hospitals for the work that they do. We are putting record funding into the NHS and we want to see results. The experience of other countries that operate systems such as payment by results is that they can help to increase activity.
	My right hon. Friend the Member for Rother Valley questioned us about the tariff. He said that it is only as good as the data and that reference costs are not detailed enough. A lot of what he said I agree with and I welcome his comments; sight of the letter that he mentioned would be useful to us. We are keen to continue to learn lessons and to improve current systems. As they stand, the reference costs provide reasonable data for the purpose for which they were designedgetting average costsbut they are not sensitive enough to derive patient-level data and could be improved in that respect. That is why we have to make adjustments for specialist top-ups, for example.
	We have made some changes to the structure of the tariff to ensure that, for example, we manage the risk of growth in non-elective activity. As the House knows, the tariff was published on 31 January but withdrawn on 22 February because there were some material errors that meant that many prices were wrong. We have now made the necessary corrections, which have been road-tested by the NHS and other stakeholders. The corrected tariff was published on Friday 17 March and is now being used by NHS organisations to refine their plans for 200607. A review of the tariff-setting process has been commissioned by Sir Ian Carruthers, so that we can learn lessons for the future. I regret the fact that mistakes were made, but we believe that this was an operational problem and that we have fixed it. The review will tell us more.

Graham Stuart: Will the Minister give way?

Jane Kennedy: I certainly will not give way to the hon. Gentleman. [Hon. Members: Ooh.] Well, he made what I consider a most sarcastic contribution and made a number of interventions, so if the House will allow me, I will move on.
	We are establishing the right culture for financial balance. We are changing the incentives associated with the performance-rating system, so that those hospitals and PCTs that are failing to meet their financial duties are identified in performance reviews. We are also designing a major drive to improve NHS productivity and efficiency. For example, we know that cutting unnecessary emergency admissionsan issue mentioned by several Labour Memberscould help the NHS to save more than 400 million a year through better assessment processes and improved patient care in primary and community settings.
	In the minority of organisations where there are significant overspends, we are taking action now to identify and correct the financial problems. I anticipate that this work will continue for at least 18 months, and it will be driven from the centre. At the same time, it will aim to build turnaround experience within the NHS to reduce reliance on external support. In some of these organisations, the overspend is large and it may take more than one yearI hope that my hon. Friends hear what I am sayingto return to financial balance. In these cases, we expect the new strategic health authorities to take the lead in developing and implementing a financial strategy for managing the situation in their locality. This will include creating local reserves to deal with local problems. The size of the reserves and the contribution from each PCT will vary according to local circumstances, but the underlying principle will be fairness.
	The House will want to know that we expect SHAs to repay any contributions to reserves over time.

Martin Horwood: Will the Minister give way?

Jane Kennedy: If the hon. Gentleman will forgive me, I will not as I have only one minute left. We expect SHAs to have full regard to the financial and service position of each organisation in determining how reserves are generated and applied. However, some SHAs may not be able to deliver a financially balanced position next year without unacceptable service consequencesa point made by a number of my hon. Friends. Where that is so, we will incentivise others to deliver a surplus to cover the situation. The money will not be moved and underspending SHAs will retain the resources for spend in future years, but the system as a whole will balance.
	There is no trade-off between meeting standards in service and financial rigour. Excellent patient care and financial control are usually associated with each other. They go hand in hand.
	It being Ten o'clock, Mr. Deputy Speaker proceeded to put forthwith the Questions relating to Estimates which he was directed to put at that hour, pursuant to Standing Order No. 54(4) and (5) (Consideration of estimates) and Order [9 March]

MINISTRY OF DEFENCE

Resolved,
	That, for the year ending with 31st March 2006, for expenditure by the Ministry of Defence
	(1) further resources, not exceeding 1,776,067,000, be authorised for use as set out in HC 827,
	(2) a further sum, not exceeding 1,889,814,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
	(3) limits as so set out be set on appropriations in aid.

DEPARTMENT OF HEALTH

Resolved,
	That, for the year ending with 31st March 2006, for expenditure by the Department of Health
	(1) further resources, not exceeding 1,785,769,000, be authorised for use as set out in HC 827,
	(2) a further sum, not exceeding 2,364,998,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs as so set out, and
	(3) limits as so set out be set on appropriations in aid.
	It being after Ten o'clock, Mr. Deputy Speaker proceeded to put forthwith the Questions relating to Estimates which he was directed to put at that hour, pursuant to Standing Order No. 55(1) and (3) (Questions on voting of estimates, c.) and Order [9 March]

ESTIMATES, 200607 (NAVY) VOTE A

Resolved,
	That, during the year ending with 31st March 2007, a number not exceeding 42,050 all ranks be maintained for Naval Service and that numbers in the Reserve Naval and Marine Forces be authorised for the purposes of Parts 1, 3, 4 and 5 of the Reserve Forces Act 1996 up to the maximum numbers set out in HC 869 of this Session.

ESTIMATES, 200607 (ARMY) VOTE A

Resolved,
	That, during the year ending with 31st March 2007, a number not exceeding 126,945 all ranks be maintained for Army Service and that numbers in the Reserve Land Forces be authorised for the purposes of Parts 1, 3, 4 and 5 of the Reserve Forces Act 1996 up to the maximum numbers set out in HC 869 of this Session.

ESTIMATES, 200607 (AIR) VOTE A

Resolved,
	That, during the year ending with 31st March 2007, a number not exceeding 52,110 all ranks be maintained for Air Force Service and that numbers in the Reserve Air Forces be authorised for the purposes of Parts 1, 3, 4 and 5 of the Reserve Forces Act 1996 up to the maximum numbers set out in HC 869 of this Session.

ESTIMATES, EXCESSES, 200405

Resolved,
	That for the year that ended with 31st March 2005, resources, not exceeding 188,157,000.00, be authorised for use to make good excesses of certain resources for defence and civil services as set out in HC 896.

SUPPLEMENTARY ESTIMATES, 200506

Resolved,
	That, for the year ending with 31st March 2006
	(1) further resources, not exceeding 6,385,504,000, be authorised for defence and civil services as set out in HC 827, HC 908 and HC 972,
	(2) a further sum, not exceeding 3,382,915,000, be granted to Her Majesty out of the Consolidated Fund to meet the costs of defence and civil services as so set out; and
	(3) limits as set out in HC 827 and HC 972 be set on appropriations in aid.
	Ordered,
	That a Bill be brought in upon the foregoing Resolutions relating to Supplementary Estimates, 200506, and Excesses, 200405, and the Resolution of 8th December relating to Supplementary Estimates, 200506: And that the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Des Browne, John Healey, Dawn Primarolo and Mr. Ivan Lewis do prepare and bring it in.

Consolidated Fund (Appropriation) (No. 2) Bill

John Healey accordingly presented a Bill to authorise the use of resources for the service of the years ending with 31st March 2005 and 31st March 2006 and to apply certain sums out of the Consolidated Fund to the service of the year ending with 31st March 2006; and to appropriate the supply authorised in this Session of Parliament for the service of the year ending with 31st March 2005 and the further supply authorised in this session of Parliament for the service of the year ending with 31st March 2006. And the same was read the first time; and ordered to be printed [Bill 149].

CONSOLIDATED FUND (APPROPRIATION) (NO. 2) BILL

Order for Second Reading read.
	Question, That the Bill be now read a Second time, put forthwith, pursuant to Standing Order No. 56 (Consolidated Fund Bills) and Order [9 March], and agreed to.
	Bill accordingly read a Second time.
	Question, That the Bill be now read the Third time, put and agreed to.
	Bill accordingly read the Third time, and passed.

DELEGATED LEGISLATION

Ordered,
	That the Hill Farm Allowance Regulations 2006 (S.I., 2006, No. 225), dated 6th February 2006 and the Bee Diseases and Pest Control (England) Order 2006 (S.I., 2006, No. 342), dated 15th February 2006, be referred to Standing Committees on Delegated Legislation.[Tony Cunningham.]

PETITIONS
	  
	Grizedale Forest

Tim Farron: I am presenting a petition on behalf of the friends of Grizedale forest. The petition
	Declares that the Forestry Commission has submitted plans to redevelop the Grizedale Visitor Centre. The Forestry Commission has stated that this will increase the number of visitors from 250,000 a year to 300,000. The Friends of Grizedale Forest object to this development on the following grounds:
	1. The projected 50,000 or so extra visitors and traffic entering the valley via the class C road system;
	2. The unsympathetic architectural design of the proposed development;
	3. The environmental concerns for the whole area.
	The Petitioners therefore request that the House of Commons urge the Secretary of State for Environment, Food and Rural Affairs to make representations to the Forestry Commission for the plans to be withdrawn.
	And the Petitioners remain, etc.
	To lie upon the Table.

Bassetlaw Primary Care Trust

John Mann: In addition to the many submissions to the current Trent strategic health authority and South Yorkshire strategic health authority consultations, 8,796 Bassetlaw residents do publicly petition
	To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
	The Humble Petition of residents of Bassetlaw,
	Sheweth
	That merging the Bassetlaw Primary Care Trust . . . into a Nottinghamshire-wide Trust would be detrimental to the excellent NHS services currently enjoyed by the people of Bassetlaw.
	Wherefore your Petitioners pray that your honourable House shall urge the Department of Health to consider the views of the people of Bassetlaw and their support for retaining a direct geographical link between Bassetlaw PCT and Doncaster and Bassetlaw Hospitals Trust, which runs Bassetlaw and Retford Hospitals.
	To lie upon the Table.

HEALTH SERVICES (WEST MIDLANDS)

Motion made, and Question proposed, That this House do now adjourn.[Mr. Dhanda.]

Mark Pritchard: I am grateful for the opportunity to discuss health services in the west midlands and, not least, health services and the health crisis in Shropshire. As the House will know, the Shropshire health economy has been debated many times. Indeed, the Minister herself has replied to questions that have been put before the House on other occasions.
	It is unfortunate that despite the fact that we have wonderful nurses, doctors and health workers throughout the whole of the Shropshire health economy, we now have a deficit of more than 50 million, which is made up of the deficits in Shropshire County primary care trust, Telford and Wrekin primary care trust and the Shrewsbury and Telford Hospital NHS Trust. The deficit will clearly have an impact on front-line patient care.
	We were told in the previous debate that such deficits would not have an impact on patient care, but it is inevitable that they will. Indeed, that is not just my opinion but that of professionals. I meet nurses and doctors all the time. We recently had a successful march in Shropshire, which was called the march for life, and tried to draw attention to the funding crisis in Shropshire. Many nursing professionals and doctors on the march told me that it would be impossible to find the money through efficiency savings alone. The Minister is an honourable lady, and we get on extremely well together. I hope that she will go back to the Secretary of State after the debate and tell her that Shropshire faces a serious problem.
	We heard in the previous debate on health that the situation is often the fault of chief executives. We have had our share of problems with chief executives and chairmen of the hospital trust. Ultimately, however, it is the Secretary of State for Health who approves and appoints the chief executives of trusts, and appoints and agrees to the chairmen of hospital trusts, so the buck must stop with the Secretary of State. That is an important point, because if we accept it the principle of not putting urgent cash injections into trusts can be overcome.
	People in Shropshire say to me, We've paid the taxes, so we expect the health services. The Prime Minister stands at the Dispatch Box week after week and says, We've put billions of pounds more into the health service, yet people in Shropshire are being asked to have less of a health service for more taxes. Clearly there is a moral point as well as a political one, because the situation is unfair and completely unjustified. An urgent cash injection for the Shropshire health economy is justified if the Secretary of State approved the senior managers whom she then blames for the funding deficit that we face. Additionally, the Government increased national insurance contributions by more than 12 per cent. That has clearly had an impact on the payrolls of all the trusts that I have mentioned, which has had a knock-on effect on patient services, too.
	We heard today that the University Hospital of North Staffordshire NHS Trust is laying off 1,000 people, many of whom will be nurses and doctors. That will also have an impact on the Shropshire health economy. Many of my constituents journey across the border for treatment. Those who require brain surgery are dealt with in Staffordshire, as are people who require thoracic surgery and complex spinal surgery that cannot be dealt with in Oswestry; there are fine people in that unit. The situation will thus have an impact on my constituents.
	It is of grave concern when the Minister of State, Department of Health, the right hon. Member for Liverpool, Wavertree (Jane Kennedy) admits to a measure of concern about such issues. There is much concern about those issues and it is deeply concerning that everything I have heard from the Government side of the Chamber todayapart from the speech by the hon. Member for Newcastle-under-Lyme (Paul Farrelly), which was thoughtful and bravehas been marked by denial and complacency. No Government, of whatever political persuasion, or however good they are at communication, public relations and marketing, can spin their way out of people's own personal experiences.
	When people come to my surgery, they tell me of the experiences that they have had at the local hospital. Many of them join me in praising the professionalism of the staff, both on the front line and in the back office, the porters and those working on the switchboard. Nobody underestimates the professionalism and commitment of hospital staff, but people are concerned when they are turned away after they have gone in for surgery. We know that the Minister said earlier that nobody waits longer than six months for an operation, but the NHS websitea Government websitetoday states that the figure has doubled. So I am puzzled by her remarks.
	It is not only acute services that will be affected. I am very concerned that the accident and emergency unit at the Princess Royal hospital in my constituency will be cut. It is no good just putting an accident and emergency sign over the door and saying that the hospital has an accident and emergency department. It needs to be fully functioning, and my constituents are concerned that we will lose the doctor-led unit and end up with a nurse-led unit. The nurses do a wonderful job, and paramedics are getting more and more trainingthey too do a marvellous jobbut they cannot replace the expertise and experience of surgeons on site to deal with emergency admissions.
	I know that the Minister has visited Shropshire before, and she has kindly accepted a new invitation to come to the hospital in my constituency in the near future. Shropshire is one of the largest inland counties in England, so however quickly and ably ambulance drivers drive, time costs lives, whether from cardiac arrests, aneurysms or severe asthma attacks. I hope that the Minister will give me an assurance this evening that the accident and emergency department at the Princess Royal hospital will remain fully functioning.
	The accident and emergency unit has important links to the paediatric services at the hospital. East Shropshire, including Telford and the Wrekin area, is the part of Shropshire with a younger population, so I hope that the Minister will give an undertaking that the children's services will not be affected.
	I wish to widen the debate to primary care services, because I am concerned about the knock-on effects on the provision of drugs, especially for the treatment of Alzheimer's disease. Many constituents tell me that they need my help to obtain Alzheimer's drugs for their grandparents or parents. It is a growing issue, and PCTs have reduced funding for it as they face other financial pressures. The same issue applies to anti-TNF drugs, and I hope that the Minister will give a commitment this evening to meet women representing Herceptin 4 Shropshire Now. She will be aware of the group, which represents women who are desperate to receive the drug to prolong their lives and make them more comfortable as they face breast cancer.

Andrew Lansley: rose

Mr. Deputy Speaker: Order. It is not the convention for Front Benchers to intervene in an Adjournment debate.

Mark Pritchard: My hon. Friend mentioned his intention to me before the debate, and I would have been happy to give way to him. However, I accept your ruling, Mr. Deputy Speaker, and I will move on.
	The other primary care issue that I wish to raise is that of mental health services. So often, people suffering from mental health problems are pushed to the back of the queue and the bottom of the pile. My concern is that the pressures on the local primary care trusts in Shropshire mean that many people facing mental health problems are not being treated, and I hope that the Minister will address that issue as well.
	I want to touch on neonatal services too. The Minister is aware that there is a fairly new maternity unit at the Princess Royal hospitalnice clean beds, nice paint on the walls and so onbut there is no expertise for dealing with mothers and babies who have complications. If a mother gives birth at the unit and there is a complication, she and her baby have to go at high speed, with blue lights flashing, to Shrewsbury to save her life or the baby's life. Given the demographics of Shropshire, unless that issue is addressed, inevitablybut God forbida mother and/or child will, unfortunately, lose their lives.
	I have raised serious issues, and we are in serious times, so I hope that as the Government appointed the previous chairman and a series of chief executives they will take responsibility, accept that the buck stops with them and reconsider funding in Shropshire. The problem is not just the financial mismanagement of the previous trust; it relates to historical per capita underfunding for Shropshire patientsmy constituentsover many years, going back to 199798. That is the key issue, and it should be addressed urgently.

Rosie Winterton: I congratulate the hon. Member for The Wrekin (Mark Pritchard) on securing the debate. As he said, it is one of a number of debates, in which he has taken part, reflecting the situation in his constituency. Obviously, I, too, have participated in those debates, answering for the Government. The hon. Gentleman and my hon. Friend the Member for Telford (David Wright) have invited me to visit their area and I understand that arrangements are being made. I am looking forward to the visit.
	The hon. Member for The Wrekin raised several concerns to which I shall respond, but it is important to remember some of the improvements that have been made to health services in his area. He referred to national insurance contributions, and I remind him that although the Conservatives voted against increased NICs, NICs have actually massively increased investment in the national health service: from 33 billion in 1997 to about 92 billion by 2008. That investment has led to improvements in his area, which I hope that he will recognise.
	In 1998, 91 patients waited more than 12 months for in-patient treatment, and 339 patients waited between nine and 11 months, at the Royal Shrewsbury Hospital NHS Trust and the Princess Royal Hospital NHS Trust, which were merged in October 2003. Now, no English patients wait more than six months for treatment at English trusts in Shropshire.
	Out-patient waiting times have been reduced. Nobody waits more than 13 weeks for an out-patient appointment in Telford and Wrekin PCT. A total of 100 per cent. of urgent referrals for suspected cancer are seen by a specialist within two weeks, and 100 per cent. of patients who want to do so can see a general practitioner within two working days, or a primary care professional within one working day. Mortality rates for heart disease and cancer have been cut dramatically in the area.
	Like the hon. Gentleman, I pay tribute to local staff for their extremely hard work and commitment in helping to make those improvements, but they would not have happened without the extra investment that has been made.
	That is not to say that there are no challenges in the area. I shall set out the background to the current position. In October 2003, two trusts merged to form the new Shrewsbury and Telford Hospital NHS Trust. At that time, their combined deficit was approximately 4 million, but by the end of the financial year the deficit had increased to 7 million. In 200405, Shropshire and Staffordshire strategic health authority agreed to provide the trust with brokerage of 2 million, on the condition that the trust broke even in that year. Throughout the year, the trust sent returns to the SHA, which was closely examining how the deficit was being handled, but at the end of the year the trust changed its forecast to a 3 million deficit. Then, extremely unfortunately, as the hon. Gentleman said, the external auditors found that, in fact, the trust had run up a 10 million deficit, so at that time the trust had a total deficit of 19 million.
	As the hon. Gentleman knows, there was an independent inquiry into the financial management and governance at the trust, which was extremely critical of the former chair, the chief executive and director of finance, all of whom had resigned in the meantime. A new management team is now in place, and I know that the hon. Gentleman thinks highly of them.

Mark Pritchard: I do admire the new senior management team, but does the Minister agree that if the team is to continue to have the support of the local Member of Parliament and of the public, it needs to be transparent and open in its dealings, and that it is not helpful when it sends out mixed messages about the future of the accident and emergency ward?

Rosie Winterton: I shall deal with the question of A and E services, but I have looked at the consultation that has taken place and I think that the management have been quite open.
	As I said, the trust is forecasting a further deficit of more than 10 million in the current year. The situation is serious and it must be addressed. I believe that we are seeing the whole local health community come together to work out, in consultation with the local communitywhich has an important part to playhow to manage the situation for the best. Decisions have to be made and acted upon, and I believe that the process being undertaken now is leading in that direction.
	The review now being conducted takes in the whole of Shropshire and is considering what can be done to achieve clinical improvements and financially sustainable health services throughout the area. The local NHS commissioned Finnamore Management Consultants to examine a range of options and in November and December last year, a pre-consultation was held involving key stakeholders. The hon. Gentleman pointed out the level of local awareness, which shows that there has been a considerable amount of consultation. What is being considered now is how to assemble a strategic service plan involving all four NHS organisations in the area, with the two PCTs taking the lead on consultation.
	Turning to the future of the accident and emergency service at the Princess Royal hospital, it is difficult to comment on the proposals, because it may fall to the Secretary of State to make decisions on them at a future date. I can only repeat the answer that I have previously given to the hon. Gentlemanthe trust's new chief executive has made it clear that he would like accident and emergency departments to be provided at both hospitals. I can confirm that the hot and cold site option, in which one hospital would deal with emergencies and the other with routine scheduled operations, has been dropped following advice from the joint overview and scrutiny committee, and it will not be submitted for consultation.

Mark Pritchard: Can the Minister rule out the option that the accident and emergency ward at the Princess Royal hospital will change from a doctor-led unit to a nurse-led unit?

Rosie Winterton: It is not possible to rule in or rule out a proposal that may be made later. However, I can repeat the chief executive's view for the hon. Gentleman. The hot and cold site option was floated, but it has been dropped.
	The hon. Gentleman spoke about paediatrics, mental health and neonatal services. Difficult decisions have to be made about service delivery, and we must look at what is most clinically appropriate in different areas. Specialist centres are important, and they are sometimes the best way of delivering care. The issues should be discussed openly, and the options thoroughly considered. It would not be right to make a decision here and now, because it is for clinicians, managers and local people to look at the available options, but they should always remember that what is important is patient safety. The highest-quality services should be provided on the advice of clinicians and others.
	Surveys show that only 11 of a total of 84 trusts have considered making small cuts in mental health services. I am not sure whether the hon. Gentleman's trust is one of those considering that option, and I am happy to write to him with further details. As I have said, the 11 trusts were going to spend 893 million, of which 16 million has been earmarked for service reductions. It is, however, a small percentage of the overall amount spent on mental health.

Mark Pritchard: The Minister has been very generous in giving way. She will be glad to know that this is the last time that I shall seek to intervene.
	We are still waiting for the strategic health authority to sign off the mental health plan for the whole of Shropshire, so I hope that she will encourage it to do so, as the plan is desperately needed by mental health patients in my constituency. Finally, will she comment on the proposal by the hospital trust to cut up to 300 jobs, including doctors and nurses? Would that protect front-line patient care, as she mentioned a few moments ago?

Rosie Winterton: We have made it clear that it is important for local trusts and local health economies to deal with the financial problems that have built up. Of course, it is regrettable when any redundancy has to occur, but it is important for staff that their local trusts get back on to a stable footing. What is worse for patients and staff is when deficits are allowed to continue without a proper grip being taken of them.
	Any proposed significant change will be subject to 12 weeks' public consultation. Strategic health authorities are coming forward where deep-seated problems are found and considering the time scale of the deficits, and they will come back to the Department if it is felt that a longer repayment period is needed. Those detailed plans will be produced shortly.
	A turnaround team has gone into the constituency of the hon. Member for The Wrekin and is currently agreeing a tailored package of help with the trust and the SHA. It is important that we have those teams in areas, working with local people and considering how to sort out the problems, while ensuringI am sure that the hon. Gentleman will be interested in thisthat the trust delivers both its key targets and financial balance. Getting those two things right is essential.
	I must reassure the hon. Gentleman that this approach is not about denial or complacencyquite the opposite: it is about saying that those problems have existed for some years, but it is important that we sort them out. It would be complacent if we were not to sort them out. Local people and staff would not appreciate it if they felt that we were not working with the local health staff and health economies in ensuring that we were proposing packages that got the trusts back into financial balance, while ensuring that they continue to meet their key targets.
	In conclusion, enormous improvements have been made in the health services in the hon. Gentleman's constituency. Investment has been increased, but challenges lie ahead. I re-emphasise that a programme has been put in place to achieve those aims. That is the right approach for local people, for patients and for the hard-working and committed NHS staff in his constituency.
	Question put and agreed to.
	Adjourned accordingly at twenty-eight minutes to Eleven o'clock.